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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: August 27, 1998
(Date of earliest event reported)
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FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
1-7806 71-0427007
(Commission File Number) (IRS Employer Identification No.)
2005 Corporate Avenue, Memphis, Tennessee 38132
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (901) 369-3600
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following documents are being filed in connection with, and
incorporated by reference in, the Registrant's Registration Statement on Form
S-3 No. 333-49411, which was declared effective on June 11, 1998.
Exhibit Description of Exhibit
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1. Form of Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998, between State Street
Bank and Trust Company of Connecticut, National Association (the
"Owner Trustee") and First Security Bank, National Association
(the "Indenture Trustee")
1.a Form of Equipment Trust Certificate
(included in Exhibit 1)
2. Form of Participation Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, among Federal Express Corporation
(the "Lessee"), Cessna Finance Corporation (the "Owner
Participant"), the Indenture Trustee, the Owner Trustee and First
Security Bank, National Association (the "Pass Through Trustee"
and the "Subordination Agent")
3. Form of Trust Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of
August 1, 1998, between the Owner Participant and the Owner
Trustee
4. Form of Lease Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of
August 1, 1998, between the Owner Trustee, as Lessor, and the
Lessee
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FEDERAL EXPRESS CORPORATION
By: /s/ MICHAEL W. HILLARD
--------------------------
Michael W. Hillard
Vice President and Controller
(principal accounting officer)
Dated: August 27, 1998
EXHIBIT INDEX
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Exhibit Description of Exhibit
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1. Form of Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998, between State Street
Bank and Trust Company of Connecticut, National Association (the
"Owner Trustee") and First Security Bank, National Association
(the "Indenture Trustee")
1.a Form of Equipment Trust Certificate
(included in Exhibit 1)
2. Form of Participation Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, among Federal Express Corporation
(the "Lessee"), Cessna Finance Corporation (the "Owner
Participant"), the Indenture Trustee, the Owner Trustee and First
Security Bank, National Association (the "Pass Through Trustee"
and the "Subordination Agent")
3. Form of Trust Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of
August 1, 1998, between the Owner Participant and the Owner
Trustee
4. Form of Lease Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of
August 1, 1998, between the Owner Trustee, as Lessor, and the
Lessee
Exhibit 1.
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TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Indenture Trustee,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
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TABLE OF CONTENTS
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Page
Initial Recitals........................................................... 1
Granting Clause............................................................ 2
Habendum Clause............................................................ 6
ARTICLE I
DEFINITIONS
Section 1.01. Definitions............................................. 7
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES;
COLLATERAL ACCOUNT
Section 2.01. Authentication and Delivery of Certificates............. 7
Section 2.02. Execution of Certificates............................... 8
Section 2.03. Certificate of Authentication........................... 8
Section 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest.................... 8
Section 2.05. Payments from Trust Indenture Estate Only............... 11
Section 2.06. Registration, Transfer and Exchange..................... 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates....................................... 13
Section 2.08. Cancellation of Certificates; Destruction Thereof....... 14
Section 2.09. Temporary Certificates.................................. 14
Section 2.10. Termination of Interest in Trust Indenture Estate....... 15
Section 2.11. Certificates in Respect of Replacement Aircraft......... 15
Section 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements............................... 15
Section 2.13. Establishment of Collateral Account..................... 15
Section 2.14. Investment of Funds on Deposit in the Collateral Account 15
Section 2.15. Amounts in the Collateral Account on Delivery Date...... 16
Section 2.16. Series C Prepayment Date................................ 17
Section 2.17. Subordination........................................... 17
Section 2.18. Reoptimization. ........................................ 18
Section 2.19. Decrease in Principal Amount of Series C Certificates... 18
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest... 18
Section 3.02. Offices for Payments, etc............................... 19
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee............................................ 19
Section 3.04. Paying Agents. ......................................... 19
Section 3.05. Covenants of SSB and the Owner Trustee. ................ 19
Section 3.06. [Reserved].............................................. 20
Section 3.07. Disposal of Trust Indenture Estate. .................... 20
Section 3.08. No Representations or Warranties as to Aircraft or
Documents.......................................... 20
Section 3.09. Further Assurances; Financing Statements. .............. 21
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates................. 21
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution................................. 22
Section 5.02. Event of Loss and Replacement; Prepayment. ............. 23
Section 5.03. Payment After Indenture Event of Default, etc. ......... 24
Section 5.04. Certain Payments........................................ 26
Section 5.05. Other Payments.......................................... 26
Section 5.06. Payments to Owner Trustee............................... 27
Section 5.07. Application of Payments................................. 27
Section 5.08. Investment of Amounts Held by Indenture Trustee......... 28
Section 5.09. Withholding Taxes....................................... 28
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity. ....................... 29
Section 6.02. Prepayment of Certificates. ............................ 29
Section 6.03. Notice of Prepayment to Holders. ....................... 31
Section 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price................................... 31
Section 6.05. Certificates Payable on Prepayment Date................. 32
Section 6.06. Mandatory Sinking Fund Redemption....................... 32
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default.............................. 33
Section 7.02. Remedies................................................ 35
Section 7.03. Return of Aircraft, etc. ............................... 37
Section 7.04. Indenture Trustee May Prove Debt........................ 40
Section 7.05. Remedies Cumulative..................................... 42
Section 7.06. Suits for Enforcement................................... 42
Section 7.07. Discontinuance of Proceedings. ......................... 42
Section 7.08. Limitations on Suits by Holders......................... 43
Section 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute
Certain Suits...................................... 43
Section 7.10. Control by Holders...................................... 43
Section 7.11. Waiver of Past Indenture Default........................ 44
Section 7.12. Notice of Indenture Default............................. 44
Section 7.13. Waiver of Appraisement, etc.; Laws. .................... 45
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant... 45
Section 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates.......................... 49
Section 8.03. Certain Rights of Owner Participant..................... 50
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts.................................... 52
Section 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an
Indenture Event of Default......................... 52
Section 9.03. Certain Rights of the Indenture Trustee................. 54
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of
Proceeds Thereof................................... 55
Section 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc................................... 55
Section 9.06. Moneys Held by Indenture Trustee. ...................... 55
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc................................... 56
Section 9.08. Replacement Airframes and Replacement Engines........... 56
Section 9.09. Indenture and Security Agreement Supplement for
Replacements....................................... 59
Section 9.10. Effect of Replacement................................... 59
Section 9.11. Compensation............................................ 60
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders.................... 60
Section 10.02. Proof of Execution of Instruments and of Holding of
Certificates...................................... 60
Section 10.03. Holders to Be Treated as Owners. ...................... 61
Section 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding............................ 61
Section 10.05. Right of Revocation of Action Taken.................... 62
Section 10.06. ERISA.................................................. 62
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee...................... 64
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor.......................... 64
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.. 65
Section 12.04. Acceptance of Appointment by Successor Trustee......... 65
Section 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee..................... 66
Section 12.06. Appointment of Separate Trustees....................... 67
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders..... 69
Section 13.02. Supplemental Indentures With Consent of Holders........ 70
Section 13.03. Effect of Supplemental Indenture....................... 72
Section 13.04. Documents to Be Given to Indenture Trustee............. 72
Section 13.05. Notation on Certificates in Respect of Supplemental
Indentures......................................... 72
Section 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement.................. 72
Section 13.07. Notices to Liquidity Providers. ....................... 72
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture...................................... 73
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates....................... 74
Section 14.03. Repayment of Moneys Held by Paying Agent. ............. 74
Section 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven
Months............................................ 74
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting............................... 75
Section 15.02. No Legal Title to Trust Indenture Estate in Holders.... 75
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee
is Binding......................................... 75
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Holders and Liquidity
Providers.......................................... 75
Section 15.05. No Action Contrary to the Lessee's Rights Under the
Lease.............................................. 76
Section 15.06. Notices................................................ 76
Section 15.07. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein................. 77
Section 15.08. Severability. ......................................... 77
Section 15.09. No Oral Modifications or Continuing Waivers............ 78
Section 15.10. Successors and Assigns. ............................... 78
Section 15.11. Headings. ............................................ 78
Section 15.12. Normal Commercial Relations. .......................... 78
Section 15.13. Governing Law; Counterparts. .......................... 78
Exhibit A -- Form of Indenture and Security Agreement Supplement
Exhibit B -- Form of Certificate
Schedule I -- Schedule of Principal Payments
Schedule II -- Definitions
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS
CORPORATION TRUST NO. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Indenture"), between STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise specifically
set forth herein (when acting in such individual capacity, "SSB"), but solely
as owner trustee (the "Owner Trustee") under the Trust Agreement, as defined
herein, and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Initial Owner Participant and SSB entered into the
Original Trust Agreement whereby, among other things, the Owner Trustee
declared a certain trust for the use and benefit of the Initial Owner
Participant, subject, however, to the Lien of the Original Indenture;
WHEREAS, because the Original Indenture was executed prior to
delivery of the Aircraft, the Original Indenture was not filed with the Federal
Aviation Administration;
WHEREAS, the Initial Owner Participant has transferred its
Beneficial Interest to the Owner Participant and in connection therewith the
Original Indenture contemplated that the Certificates would be reoptimized and
the Original Indenture amended and restated;
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with their respective terms, have been done and performed and have happened;
and
WHEREAS, the parties hereto desire to amend and restate the
Original Indenture in its entirety.
NOW, THEREFORE, the parties agree that such Original Indenture be
and the same is hereby amended and restated in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the Lease
contained for the benefit of the Holders of the Certificates, and the prompt
payment of any and all amounts from time to time owing under the Participation
Agreement by the Owner Trustee, the Owner Participant or the Lessee to the
Holders (collectively the "Secured Obligations") and for the uses and purposes
and subject to the terms and provisions of this Indenture, and in consideration
of the premises and of the covenants in this Indenture and in the Certificates
and of the purchase of the Certificates by their Holders, and of the sum of $1
paid to the Owner Trustee by the Indenture Trustee at or before the delivery of
this Indenture, the receipt and sufficiency of which is hereby acknowledged,
the Owner Trustee has granted, bargained, sold, assigned, transferred,
conveyed, mortgaged, pledged, granted a first priority security interest in and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and grant a first priority security interest in and confirm to
the Indenture Trustee, its successors and assigns, in trust for the equal and
ratable security and benefit of the Holders from time to time of the
Certificates, a first priority security interest in and first mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights and privileges other than Excepted
Payments, which collectively, excluding Excepted Payments but including all
property specifically subjected to the Lien of this Indenture by the terms
hereof, by any Indenture and Security Agreement Supplement or any mortgage
supplemental to this Indenture, are included within the Trust Indenture Estate,
subject always to the rights granted to the Owner Trustee or the Owner
Participant hereunder and to the other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described
in the Indenture and Security Agreement Supplement and any airframe substituted
in replacement thereof pursuant to the provisions of this Indenture; the
Engines, as the same are more particularly described in the Indenture and
Security Agreement Supplement, whether or not such Engines shall be installed
in or attached to the Airframe or any other airframe, and any Replacement
Engine therefor; and all Parts in respect of the Airframe and the Engines and
all records, logs and other documents at any time maintained with respect to
the foregoing property;
(2) The Lease and all Rent thereunder, including, without
limitation, all amounts of Basic Rent and Supplemental Rent, and payments of
any kind thereunder and including all rights of the Owner Trustee to execute
any election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement, the Purchase Agreement Assignment,
the AVSA Consent and Agreement, the Consent and Agreement, the Consent and
Guaranty, the GTA, the Engine Warranty Assignment and the Engine Consent,
AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Ancillary Agreements, the Letter of Credit and the Participation Agreement (to
the extent of amounts payable to the Owner Trustee thereunder) (collectively,
and together with the Lease, the Trust Agreement and the Certificates, the
"Indenture Documents"), including all rights of the Owner Trustee to execute
any election or option or to give or receive any notice, consent, waiver or
approval under or in respect of any of the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues
and other income (including sales proceeds) of the property subjected or
required to be subjected to the Lien of this Indenture, and all of the estate,
right, title and interest of the Owner Trustee in and to the same and every
part of said property;
(5) The Collateral Account, the Liquid Collateral and all
other moneys and securities (including Permitted Investments) now or hereafter
paid or deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term of any
Operative Agreement, except the Tax Indemnity Agreement, and held or required
to be held by the Indenture Trustee hereunder (provided, that, the Collateral
Account and the Liquid Collateral shall only secure the Secured Obligations
relating to any Series C Certificates outstanding after the Delivery Date that
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) hereof);
(6) All requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the terms of the Lease) and all insurance proceeds with respect to
the Aircraft or any part thereof from insurance required to be maintained by
the Lessee under Article 13 of the Lease, but excluding any insurance
maintained by the Lessee and not required under Article 13 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and
security interest of this Indenture and from the Trust Indenture Estate, (i)
all Excepted Payments, including without limitation all right, title and
interest of the Owner Participant in, to and under the Tax Indemnity Agreement
and any moneys due or to become due under the Tax Indemnity Agreement and all
rights to collect and enforce Excepted Payments and (ii) rights granted to or
retained by the Owner Trustee or the Owner Participant hereunder and SUBJECT TO
the following provisions:
(a) (i) whether or not an Indenture Event of Default shall
occur and be continuing, the Owner Trustee and the Owner Participant shall at
all times retain the right, to the exclusion of the Indenture Trustee, (A) to
Excepted Payments and to commence an action at law to obtain such Excepted
Payments and (B) to adjust Basic Rent and the percentages relating to
Stipulated Loss Value and Termination Value and the EBO Price as provided in
Section 3.04 of the Lease and Section 15.01 of the Participation Agreement, (C)
to exercise any election or option to make any decision or determination, or to
give or receive any notice, consent, waiver or approval, or to take any other
action in respect of, but in each case only to the extent relating to, Excepted
Payments (except for, in respect of Basic Rent constituting an Excepted
Payment, the manner by which such amount is paid), (D) to retain the rights of
the "Lessor" with respect to solicitations of bids, and the election to retain
the Aircraft, pursuant to Article 10 of the Lease, (E) to retain the right of
"Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to
Article 4 of the Lease, (F) to retain all rights with respect to insurance
maintained for its own account which Section 13.05 of the Lease specifically
confers on the "Lessor" and (G) to exercise, to the extent necessary to enable
it to exercise its rights under Section 8.03 hereof, the rights of the "Lessor"
under Section 17.04 of the Lease;
(ii) whether or not an Indenture Event of Default shall occur
and be continuing, the Owner Trustee and the Indenture Trustee shall each have
the rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to give
or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in respect
thereof, and (E) the right to consent to changes to the list of countries on
Schedule III to the Participation Agreement;
(iii) (A) so long as no Indenture Event of Default shall have
occurred and be continuing (but subject to the provisions of Section 8.01
hereof), the Owner Trustee shall retain the right, to the exclusion of the
Indenture Trustee, to approve as satisfactory any accountants, engineers,
appraisers or counsel to render services for or issue appraisals, reports,
certificates or opinions to the Owner Trustee pursuant to express provisions of
the Operative Agreements, and (B) so long as no Indenture Event of Default not
constituting an Event of Default shall have occurred and be continuing (but
subject to the provisions of Section 8.01 hereof), the Owner Trustee shall
retain the right, jointly with the Indenture Trustee (agreement of both not
being required), to further assurances and financial information from the
Lessee pursuant to Section 19.01 of the Lease (other than the right to receive
any funds to be delivered to the "Lessor" under the Lease (except funds
delivered with respect to Excepted Payments) and under the Purchase Agreement;
and
(iv) at all times the Owner Trustee shall have the right as
Lessor, but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft.
(b) The leasehold interest granted to the Lessee by the Lease
shall not be subject to the security interest granted by this Indenture, and
nothing in this Indenture shall affect the rights of the Lessee under the Lease
so long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable benefit
and security of the Holders from time to time of the Certificates, without any
priority of any one Certificate over any other and for the uses and purposes
and subject to the terms and conditions set forth in this Indenture.
It is expressly agreed that anything contained in this Indenture
to the contrary notwithstanding, the Owner Trustee shall remain liable under
the Indenture Documents to perform all of the obligations assumed by it under
any of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of the
Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file any
claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture
Event of Default, the Owner Trustee hereby constitutes the Indenture Trustee
the true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise), subject to the terms and
conditions of this Indenture, to ask, require, demand, receive, compound and
give acquittance for any and all Basic Rent, Supplemental Rent payable to the
Owner Trustee, Stipulated Loss Value and Termination Value payments, insurance
proceeds and any and all moneys and claims for moneys due and to become due
under or arising out of the Lease (subject to Section 8.01 hereof) or the other
Indenture Documents (other than Excepted Payments), to endorse any checks or
other instruments or orders in connection with the same and to file any claims,
take any action or institute any proceeding which the Indenture Trustee may
deem to be necessary or advisable in the premises.
Under the Lease the Lessee is directed to make all payments of
Rent (other than Excepted Payments not constituting Basic Rent) payable to the
Owner Trustee and all other amounts (other than Excepted Payments not
constituting Basic Rent) which are required to be paid to or deposited with the
Owner Trustee pursuant to the Lease directly to the Indenture Trustee at such
address in the United States of America as the Indenture Trustee shall specify
for application as provided in this Indenture. The Owner Trustee agrees that
if, notwithstanding such provision, it shall have received any such amounts,
promptly on receipt of any such payment, it will transfer to the Indenture
Trustee any and all moneys from time to time received by the Owner Trustee
constituting part of the Trust Indenture Estate for distribution by the
Indenture Trustee pursuant to this Indenture, except that the Owner Trustee
shall accept for distribution pursuant to the Trust Agreement (i) any amounts
distributed to it by the Indenture Trustee under this Indenture, and (ii) any
Excepted Payments not constituting Basic Rent.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and
delivered any and all such further instruments and documents as the Indenture
Trustee may reasonably deem desirable in obtaining the full benefits of the
assignment hereunder and of the rights and powers herein granted; provided,
however, that the Owner Trustee shall have no obligation to execute and deliver
or cause to be executed or delivered to the Indenture Trustee any such
instrument or document if such execution and delivery would result in the
imposition of additional liabilities on the Owner Trustee or the Owner
Participant or would result in a burden on the Owner Participant's business
activities, unless the Owner Trustee or the Owner Participant, as the case may
be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has
not assigned, pledged or otherwise disposed of, and hereby covenants that it
will not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect, any of its right, title or interest hereby
assigned, to anyone other than the Indenture Trustee, and that it will not,
except in respect of Excepted Payments or otherwise as provided in or permitted
by this Indenture, accept any payment from the Lessee or any sublessee, enter
into an agreement amending or supplementing any of the Operative Agreements,
execute any waiver or modification of, or consent under the terms of any of the
Operative Agreements, settle or compromise any claim (other than claims in
respect of Excepted Payments) against the Lessee arising under any of the
Operative Agreements, or submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Operative
Agreements, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner
Trustee has delivered to the Indenture Trustee executed counterparts of the
Trust Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the
parties as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise
requires, capitalized terms utilized herein shall have the meanings set forth
in Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES;
COLLATERAL ACCOUNT
Section 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of the Original Indenture, and from
time to time thereafter, Certificates in an aggregate principal amount not in
excess of the amount specified in Section 2.04 hereof (except as otherwise
provided in Sections 2.06 and 2.07 hereof) were or shall be, as the case may
be, executed by the Owner Trustee and delivered to the Indenture Trustee for
authentication, and the Indenture Trustee thereupon did or shall, as the case
may be, authenticate and deliver said Certificates to or upon the oral or
written order of the Owner Trustee, signed, if written, by an authorized
officer of the Owner Trustee, without any further action by the Owner Trustee.
Section 2.02. Execution of Certificates. The Certificates shall
be signed on behalf of the Owner Trustee by an authorized officer of SSB. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of SSB who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of by
SSB, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of SSB; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the execution
of such Certificate, shall be the proper officers of SSB, although at the date
of the execution and delivery of this Indenture any such person was not such an
officer. Certificates bearing the facsimile signatures of individuals who were
authorized officers of SSB at the time such Certificates were issued shall bind
the Owner Trustee, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Certificates or did not hold such offices at the respective dates of such
Certificates.
Section 2.03. Certificate of Authentication. Only such
Certificates as shall bear thereon a certificate of authentication
substantially in the form set forth in Exhibit B, executed by the Indenture
Trustee by manual signature of one of its authorized officers, shall be
entitled to the security and benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Indenture Trustee upon any
Certificate executed by the Owner Trustee shall be conclusive evidence that the
Certificate so authenticated has been duly authenticated and delivered
hereunder and that the Holder, as evidenced on the Register, is entitled to the
security and benefits of this Indenture.
Section 2.04. Form and Terms of Certificates; Payments of
Principal, Make- Whole Premium and Interest. The Certificates and the
Indenture Trustee's certificate of authentication shall be substantially in the
form set forth in Exhibit B hereto. Certificates may differ with respect to
Maturity and as to other terms. The Certificates shall be issuable as
registered securities without coupons and shall be numbered, lettered, or
otherwise distinguished in such manner or in accordance with such plans as the
Owner Trustee executing the same may determine with the approval of the
Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Certificate Closing Date, shall be issued
in three separate series consisting of Series A, Series B and Series C and
shall be issued in the Maturities and principal amounts, and shall bear
interest at the rates per annum, specified in the form of Certificate set forth
in ExhibitB.
Any of the Certificates may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or with
any rules or regulations pursuant thereto, or with the rules of any securities
market in which the Certificates are admitted to trading, or to conform to
general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the basis
of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall
bear interest at the Past Due Rate on any principal, interest and any other
amount payable hereunder or under such Certificate, which shall not be paid in
full when due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full, payable from time
to time on demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest
on, the Certificates shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof; provided, however, that interest may be
payable at the option of the Indenture Trustee or its Paying Agent, as defined
in Section 3.04, by mailing checks for such interest payable to or upon the
written order of the Holders entitled thereto as they shall appear on the
Register. If any amount payable under the Certificates, or under this
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
The Holder at the close of business on any Record Date with
respect to any Payment Date shall be entitled to receive the interest if any
payable on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 5.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by the Lessee to (i)
the Indenture Trustee in its individual capacity, (ii) the Subordination Agent
or (iii) each Liquidity Provider, in each case pursuant to Article 8 or 9 of
the Participation Agreement (it being acknowledged that the Lessee has been
instructed to pay such amounts to the Person or Persons entitled thereto) and
(b) the Owner Trustee's pro rata share of all amounts owed to each Liquidity
Provider by the Subordination Agent under each Liquidity Facility other than
amounts due as (i) repayments of the principal of advances thereunder, and (ii)
interest on Interest Drawings and Final Drawings except to the extent included
in Net Interest and Related Charges. As used in this Section, the Owner
Trustee's pro rata share means as of any time:
(A) with respect to all amounts other than Net
Interest and Related Charges, a fraction the numerator of which
is the aggregate principal balance then outstanding of the
Certificates issued under this Indenture (other than the Series C
Certificates) and the denominator of which is the aggregate
principal balance of all Certificates issued under this Indenture
and the Related Indentures (other than the Series C
Certificates), plus
(B) with respect to all Net Interest and Related
Charges (x) if there exists a Payment Default under any
Certificate issued under this Indenture a fraction, the numerator
of which is the aggregate principal balance then outstanding of
Certificates issued under this Indenture (other than the Series C
Certificates) and the denominator of which is the aggregate
principal balance then outstanding of all Certificates issued
under this Indenture and the Related Indentures (other than the
Series C Certificates) under which there exists a Payment Default
or (y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of
(i) the amount, if any, by which interest payable to each Liquidity Provider on
any Interest Drawing and/or Final Drawing exceeds the amount which would be
payable if such drawings bore interest at the weighted average Past Due Rate
applicable to amounts in default on all Certificates plus (ii) any amounts
payable under Section 3.01, Section 3.02, Section 3.03, Section 3.09 or Section
7.07 of each Liquidity Facility (or similar provisions of any replacement
Liquidity Facility) which result from any Interest Drawing or Final Drawing.
As used in this Section, a Payment Default when used in connection with a
Certificate issued hereunder or a Certificate issued under any Related
Indenture means a default in the payment of principal thereof or interest
thereon (which default has not been cured), other than solely because of
acceleration.
Section 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Lessor's Estate to the extent included
in the Trust Indenture Estate (and such other amounts) to enable the Indenture
Trustee to make distributions of the amounts due in respect of the Certificates
in accordance with the terms hereof and thereof. Each Holder by its acceptance
of a Certificate agrees that it will look solely to the income and proceeds
from the Trust Indenture Estate (and such other amounts of the type described
in Section 5.01 hereof and Section 17.02(e) of the Participation Agreement to
the extent actually received by the Indenture Trustee) to the extent available
for distribution to it as provided herein and that neither the Owner
Participant, the Owner Trustee, SSB nor the Indenture Trustee is personally
liable to such Holder for any amounts payable under this Indenture or such
Certificate or for any amounts payable or liability under any Certificate or
this Indenture, except as expressly provided herein in the case of SSB, the
Owner Trustee or the Indenture Trustee.
SSB is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates, except
as a result of SSB's gross negligence or willful misconduct, or as otherwise
expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the
property of a debtor subject to the reorganization provisions of the Bankruptcy
Code, (2) pursuant to such reorganization provisions the Owner Participant is
required, by reason of the Owner Participant being held to have recourse
liability to the debtor or the trustee of the debtor directly or indirectly, to
make payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Participant under the Participation Agreement, or from retaining
any amount paid by the Owner Participant under Sections 5.01, 8.02 and 8.03
hereof.
Section 2.06. Registration, Transfer and Exchange. The
Indenture Trustee will keep, on behalf of the Owner Trustee, at each office or
agency to be maintained for the purpose as provided in Section 3.02 hereof a
Register or Registers on which, subject to such reasonable regulations as it
may prescribe, it will register, and will register the transfer of,
Certificates as provided in this Article. Such Register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable period of time.
Upon due presentation for registration of transfer of any
Certificate at any such office or agency, the Owner Trustee shall execute and
the Indenture Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Certificate or Certificates of the same Series
and Maturity and interest rate and in authorized denominations for an equal
aggregate principal amount.
Any Certificate or Certificates may be exchanged for a
Certificate or Certificates of the same Series and Maturity and interest rate
but in other authorized denominations, in an equal aggregate principal amount.
Certificates to be exchanged shall be surrendered at any office or agency to be
maintained by the Indenture Trustee for the purpose as provided in Section 3.02
hereof, and the Owner Trustee shall execute and the Indenture Trustee shall
authenticate and deliver in exchange therefor the Certificate or Certificates
which the Holder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously or previously outstanding.
All Certificates presented for registration of transfer,
exchange, prepayment or payment shall (if so required by the Owner Trustee or
the Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Section
15.01 of the Participation Agreement) the Indenture Trustee may require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act.
The Indenture Trustee may require payment from the Holder of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
Certificates. No service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or
register a transfer of any Certificates (a) for a period of fifteen (15) days
immediately preceding the first mailing of notice of prepayment of such
Certificates or (b) with respect to which notice of prepayment has been given
pursuant to Section6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of
Certificates shall be valid obligations of the Owner Trustee, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Certificates surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request of
any officer of SSB, the Indenture Trustee shall authenticate and deliver, a new
Certificate of like Maturity, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Certificate, or in lieu of and substitution for the Certificate so
apparently destroyed, lost or stolen. In the case of any Certificate so
apparently destroyed, lost or stolen, the applicant for a substitute
Certificate shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to save each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Upon the issuance of any substitute Certificate, the Owner
Trustee or the Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses connected therewith. In
case any Certificate which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing
a substitute Certificate, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Certificate), if
the applicant of any Certificate so apparently destroyed, lost or stolen, for
such payment shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as any of them may require to save each of them
harmless and the applicant shall also furnish to the Owner Trustee and the
Indenture Trustee evidence to their satisfaction of the apparent destruction,
loss or theft of such Certificate and of the ownership thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered hereunder.
All Certificates shall be held and owned upon the express condition that, to
the extent permitted by law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, defaced, or apparently
destroyed, lost or stolen Certificates and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
Section 2.08. Cancellation of Certificates; Destruction Thereof.
All Certificates surrendered for payment, prepayment, registration of transfer
or exchange, if surrendered to the Owner Trustee or any agent of the Owner
Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee
for cancellation or, if surrendered to the Indenture Trustee, shall be
cancelled by it; and no Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Indenture
Trustee shall destroy cancelled Certificates held by it and deliver a
certificate of destruction to the Owner Trustee. If the Owner Trustee shall
acquire any of the Certificates, such acquisition shall not operate as a
prepayment or satisfaction of the indebtedness represented by such Certificates
unless and until the same are delivered to the Indenture Trustee for
cancellation.
Section 2.09. Temporary Certificates. Pending the preparation
of definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of SSB, the Indenture Trustee shall authenticate
and deliver temporary Certificates (printed, lithographed, typewritten or
otherwise reproduced, in each case in form satisfactory to the Indenture
Trustee). Temporary Certificates shall be issuable as registered Certificates
without coupons, of any authorized denomination, and substantially in the form
of the definitive Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Certificates, all as may be
determined by the Owner Trustee with the concurrence of the Indenture Trustee.
Temporary Certificates may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Certificate shall be executed
by the Owner Trustee and, upon the oral or written request of an authorized
officer of the Owner Trustee, be authenticated by the Indenture Trustee upon
the same conditions and in substantially the same manner, and with like effect,
as the definitive Certificates. Without unreasonable delay the Owner Trustee
shall execute and shall furnish definitive Certificates and thereupon temporary
Certificates shall be surrendered in exchange therefor without charge at any
office or agency to be maintained by the Indenture Trustee for the purpose
pursuant to Section 3.02 hereof, and, upon the oral or written request of an
authorized officer of the Owner Trustee, the Indenture Trustee shall
authenticate and deliver in exchange for such temporary Certificates an equal
aggregate principal amount of definitive Certificates of the same Series and
Maturities and interest rates and in authorized denominations. Until so
exchanged, temporary Certificates shall be entitled to the same security and
benefits under this Indenture as definitive Certificates.
Section 2.10. Termination of Interest in Trust Indenture Estate.
A Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder and under the other Operative Agreements shall have been paid in
full.
Section 2.11. Certificates in Respect of Replacement Aircraft.
Upon the execution and delivery of an Indenture and Security Agreement
Supplement covering a Replacement Airframe and/or Replacement Engine, as
provided in Section 9.09 hereof, each Certificate shall be deemed to have been
issued in connection with such Replacement Airframe and/or Replacement Engine
and each Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such Replacement Airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
Section 2.12. Assumption of Obligations Under Certificates and
Other Operative Agreements. If, in accordance with and subject to the
satisfaction of the conditions set forth in Section 7.11 of the Participation
Agreement, the Lessee shall assume all of the obligations of the Owner Trustee
hereunder, under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the Certificates and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
Section 2.13. Establishment of Collateral Account. On the
Certificate Closing Date, the Indenture Trustee, pursuant to the Collateral
Agreement, established with State Street Bank and Trust Company in its name as
secured party hereunder an Eligible Deposit Account entitled "First Security
Bank, National Association, as secured party under the Trust Indenture and
Security Agreement (Federal Express Corporation Trust No. N677FE) dated as of
June 15, 1998, with the Owner Trustee referred to therein".
Section 2.14. Investment of Funds on Deposit in the Collateral
Account. (a) Funds deposited in the Collateral Account shall be invested and
reinvested by the Indenture Trustee, subject to Section 17.02 of the
Participation Agreement, at the risk of the Owner Trustee, in Specified
Investments selected by the Lessee and approved by the Indenture Trustee for
the account of the Owner Trustee in accordance with Section 2.14(b) below;
provided, however, that if Specified Investments meeting the requirements of
Section 2.14(b) are not available on any day on which funds are to be invested
as contemplated by the preceding provisions of this Section 2.14(a), the
Indenture Trustee may leave such funds in the Collateral Account uninvested
until the earlier of (i) the date on which an appropriate Specified Investment
becomes available and (ii) the date on which the Lien of this Indenture on the
Collateral Account and the Liquid Collateral shall be terminated. The
Indenture Trustee shall maintain possession of the negotiable instruments or
securities, if any, evidencing such Specified Investments and, in the case of
any Specified Investments in book-entry form, such Specified Investments shall
be credited to an account of the Indenture Trustee or a financial intermediary
with the applicable Federal Reserve Bank; provided, however, if the account is
credited to the financial intermediary, the financial intermediary shall make
written confirmation thereof to the Indenture Trustee and make an appropriate
entry on its books identifying the Specified Investments as pledged to the
Indenture Trustee. All proceeds of and any income, interest and other payments
and distributions on or with respect to any Specified Investments shall be
deposited in or credited to the Collateral Account and thereafter shall be
held, invested and applied by the Indenture Trustee in accordance with this
Indenture. The Indenture Trustee shall promptly notify the Owner Trustee and
the Lessee of any Losses.
(b) Any amount remaining in the Collateral Account after the
Delivery Date shall be invested in Specified Investments which mature on or
prior to the Series C Prepayment Date. Notwithstanding anything to the
contrary in this subsection (b), the Indenture Trustee shall invest the amounts
deposited in the Collateral Account in a manner which shall result in cash
being available in the Collateral Account which shall be used by the Indenture
Trustee to pay a portion of interest payable on each Certificate secured by the
Collateral Account on each Payment Date during the period in which funds are on
deposit in the Collateral Account.
(c) If for any reason the Indenture Trustee shall be required to
make any distributions of the Liquid Collateral prior to the maturity date of
any Specified Investment, the Indenture Trustee shall cause the same to be sold
in accordance with standard commercial practices, and the Lessee, for the
account of the Owner Trustee, shall forthwith pay to the Subordination Agent an
amount equal to any Losses as provided in Section 17.02(a) of the Participation
Agreement.
(d) Pursuant to Section 17.02(b) of the Participation Agreement,
interest payable on the Certificates during the period in which funds are on
deposit in the Collateral Account shall be paid by the Lessee to the extent
such interest payable is in excess of any earnings on investments in the
Collateral Account for the period of accrual of such interest.
Section 2.15. Amounts in the Collateral Account on Delivery
Date. Any amounts remaining in the Collateral Account after release of the
amounts required to finance the Debt Portion shall be retained in the
Collateral Account until the Series C Prepayment Date to secure the Secured
Obligations relating to any Series C Certificates subject to prepayment
pursuant to Section 6.02(a)(viii) hereof; provided, that, any portion of such
amounts so retained may be released from the Collateral Account by the
Indenture Trustee prior to the Series C Prepayment Date pursuant to Section
2.19 hereof. The aggregate principal amount of the Series C Certificates which
are subject to prepayment pursuant to Section 6.02(a)(viii) hereof shall be set
forth in a written notice by the Lessee to the Indenture Trustee in accordance
with Section 2.03(b) of the Original Participation Agreement. Any such amount
retained in the Collateral Account shall be invested in Specified Investments
pursuant to Section 2.14(b) hereof.
Section 2.16. Series C Prepayment Date. On the Series C
Prepayment Date, in the case of a prepayment under Section 6.02(a)(viii)
hereof, the Indenture Trustee shall release from the Collateral Account all
amounts held in the Collateral Account on such date. Such amounts so released,
together with the amount of any Losses paid by the Lessee to the Subordination
Agent pursuant to Sections 17.02(a) and 17.02(c) of the Participation
Agreement, shall be applied to pay all amounts due under Section 6.02(b)(1)
hereof on the Series C Prepayment Date, whereupon the Lien of this Indenture on
the Collateral Account and the Liquid Collateral shall terminate and any amount
(net of any unpaid Losses) remaining after such release and application shall
be remitted by the Indenture Trustee, on behalf of the Owner Trustee, to the
Lessee.
Section 2.17. Subordination. (a) The Owner Trustee and, by
acceptance of its Certificates of any Series, each Holder of such Series,
hereby agree that no payment or distribution shall be made on or in respect of
the Secured Obligations owed to such Certificate Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in clause (v), (vi) or
(vii) of Section 7.01 hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Certificates of any
Series (other than Series A), each Holder of such Series agrees that in the
event that such Holder, in its capacity as a Holder, shall receive any payment
or distribution on any Secured Obligations in respect of such Series which it
is not entitled to received under this Section 2.17 or Article V hereof, it
will hold any amount so received in trust for the Senior Holder (as defined in
Section 2.17(c) hereof) and will forthwith turn over such payment to the
Indenture Trustee in the form received to be applied as provided in Article V
hereof.
(c) As used in this Section 2.17, the term "Senior
Holder" shall mean, (i) the Holders of Series A Certificates until the Secured
Obligations in respect of Series A Certificates have been paid in full, (ii)
after the Secured Obligations in respect of Series A Certificates have been
paid in full, the Holders of Series B Certificates until the Secured
Obligations in respect of Series B Certificates have been paid in full and
(iii) after the Secured Obligations in respect of Series B Certificates have
been paid in full, the Holders of Series C Certificates until the Secured
Obligations in respect of Series C Certificates have been paid in full.
Section 2.18. Reoptimization. The Owner Trustee shall have the
right, on any Adjustment Date and on the Series C Prepayment Date in the event
of any prepayment of Series C Certificates pursuant to Section 6.02(a)(viii)
hereof, to modify the schedule of principal payments of the Certificates
subject to the terms and conditions set forth in Section 2.03(b) of the
Original Participation Agreement. To give effect to the foregoing, Schedule I
to the Indenture and each Certificate shall be amended accordingly. The
Indenture Trustee shall deliver such amendments to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass Through Trusts.
Section 2.19. Decrease in Principal Amount of Series C
Certificates. The principal amount of the Series C Certificates, if any, which
would otherwise be required to be prepaid pursuant to Section 6.02(a)(viii)
hereof, may be decreased upon written notice by the Lessee, on behalf of the
Owner Trustee, to the Indenture Trustee. In such event the Indenture Trustee
shall, if so instructed by the Lessee on behalf of the Owner Trustee, release a
corresponding amount from the Collateral Account and transfer such amount to
one or more Outstanding C Accounts. To give effect to the foregoing, Schedule
I to the Indenture and each Certificate shall be amended accordingly. The
Indenture Trustee shall deliver such amendments to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass Through Trusts.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and
Interest. The Owner Trustee covenants and agrees that it will, subject to
Section 2.05 hereof, duly and punctually pay or cause to be paid the principal
of, and interest and Make-Whole Premium, if any, and all other amounts due on,
each of the Certificates and under this Indenture at the place or places, at
the respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under
the Certificates shall be payable in dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Department (or such other account at
such other financial institution as the Indenture Trustee may designate for the
purpose). If any amount payable under the Certificates or under this Indenture
falls due on a day which is not a Business Day, then such sum shall be payable
on the next succeeding Business Day, without (provided that payment is made on
such next succeeding Business Day) additional interest thereon for the period
of such extension.
Section 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented for
payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange and
for prepayment as provided in this Indenture (the "Registrar"). The Registrar
shall keep a register (the "Register") with respect to the Certificates and
their transfer and exchange. The Indenture Trustee may appoint one or more
co-registrars ("Co-Registrars") for the Certificates and may terminate any such
appointment at any time upon written notice. The term "Registrar" includes any
Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of
Indenture Trustee. The Owner Trustee, whenever necessary to avoid or fill a
vacancy in the office of Indenture Trustee, will, with the consent of the
Lessee, appoint, in the manner provided in Section 12.02 hereof, an Indenture
Trustee, so that there shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in
its sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the Paying
Agent shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent for
the payment of the principal of, and interest and Make-Whole Premium, if
any, on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Owner Trustee to make any payment of the principal of or
interest or Make-Whole Premium, if any, on the Certificates when the same
shall be due and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to the
provisions of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of SSB and the Owner Trustee.
(a) SSB hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee
shall have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Owner Trustee under the Lease, including,
without limitation, a copy of each report or notice received pursuant to
Article 13 of the Lease, to the extent that the same shall not have been
furnished to the Indenture Trustee;
(iii) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Indenture Documents; and
(iv) except as contemplated by the Operative Agreements, the
Owner Trustee will not contract for, create, incur or assume any debt, and
will not guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Reserved].
Section 3.07. Disposal of Trust Indenture Estate. At any time
and from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR SSB NOR THE
OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR
PURPOSE OF THE AIRCRAFT OR ANY ENGINE, OR ANY OTHER REPRESENTATION OR WARRANTY
WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE WHATSOEVER, except that SSB warrants
that on the Delivery Date (a) the Owner Trustee shall have received whatever
title was conveyed to it by the Lessee, and (b) the Aircraft shall be free and
clear of Lessor's Liens attributable to SSB. Neither SSB, the Indenture
Trustee nor the Owner Participant makes or shall be deemed to have made any
representation or warranty as to the validity, legality or enforceability of
this Indenture, the Trust Agreement, the Certificates or any Indenture Document
or as to the correctness of any statement contained in any thereof, except for
the representations and warranties of SSB, the Indenture Trustee and the Owner
Participant made under this Indenture or in the Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any
time and from time to time, upon the request of the Indenture Trustee or the
Lessee, the Owner Trustee shall promptly and duly execute and deliver any and
all such further instruments and documents as may be specified in such request
and as are necessary or advisable to perfect, preserve or protect the Liens and
assignments created or intended to be created hereby, or to obtain for the
Indenture Trustee the full benefit of the specific rights and powers granted
herein, including, without limitation, the execution and delivery of UCC
financing statements and continuation statements with respect thereto, or
similar instruments relating to the perfection of the Liens or assignments
created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than fifteen (15)
days after each Record Date, as of such Record Date, or at such other times as
the Indenture Trustee may request in writing, a list, in such form and as of
such date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Holders and the amounts and Maturities of the Certificates
held by such Holders.
(b) Ownership of the Certificates shall be proved by the
Register kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise
provided in Section 5.03 hereof, each installment of Basic Rent, any payment of
interest on overdue installments of Basic Rent, any payment received by the
Indenture Trustee pursuant to Section 8.03(a) hereof and any payment received
by the Indenture Trustee pursuant to Section 17.02(b) or 17.02(c) of the
Participation Agreement shall be promptly distributed in the following order of
priority:
first, (i) so much of such installment or payment as shall
be required to pay in full the aggregate amount of the
payment or payments of Principal Amount and interest and
other amounts (as well as any interest on any overdue
Principal Amount and, to the extent permitted by
applicable law, on any overdue interest and any other
overdue amounts) then due under all Series A Certificates
shall be distributed to the Holders of Series A
Certificates ratably, without priority of one over the
other, in the proportion that the amount of such payment
or payments then due under each Series A Certificate bears
to the aggregate amount of the payments then due under all
Series A Certificates;
(ii) after giving effect to paragraph (i) above, so
much of such installment or payment as shall be required
to pay in full the aggregate amount of the payment or
payments of Principal Amount and interest and other
amounts (as well as any interest on any overdue Principal
Amount and, to the extent permitted by applicable law, on
any overdue interest and any other overdue amounts) then
due under all Series B Certificates shall be distributed
to the Holders of Series B Certificates ratably, without
priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
Series B Certificate bears to the aggregate amount of the
payments then due under all Series B Certificates; and
(iii) after giving effect to paragraph (ii) above, so
much of such installment or payment as shall be required
to pay in full the aggregate amount of the payment or
payments of Principal Amount and interest and other
amounts (as well as any interest on any overdue Principal
Amount and, to the extent permitted by applicable law, on
any overdue interest and any other overdue amounts) then
due under all Series C Certificates shall be distributed
to the Holders of Series C Certificates ratably, without
priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
Series C Certificate bears to the aggregate amount of the
payments then due under all Series C Certificates; and
second, the balance if any of such installment or payment
remaining thereafter shall be distributed to the Owner
Trustee, or as the Owner Trustee may request, for
distribution pursuant to the Trust Agreement.
Section 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the case
of said Section 11.03(e), subject to the time limits specified therein) or as
the result of, or in connection with any event under the Lease giving rise to,
a prepayment pursuant to Section 6.02 hereof, shall be promptly distributed by
the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or
expenses reasonably incurred in connection with such
prepayment,
second, (i) to pay the amounts specified in paragraph (i) of
clause "second" of Section 5.03 hereof then due and
payable in respect of the Series A Certificates;
(ii) after giving effect to paragraph (i) above, to pay
the amounts specified in paragraph (ii) of clause "second"
of Section 5.03 hereof then due and payable in respect of
the Series B Certificates; and
(iii) after giving effect to paragraph (ii) above, to
pay the amounts specified in paragraph (iii) of clause
"second" of Section 5.03 hereof then due and payable in
respect of the Series C Certificates;
provided that payments pursuant to this clause "second"
shall be made without the payment of Make-Whole Premium
except in the particular circumstances provided in Section
6.02(b) hereof; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Section 11.03 of the Lease and
Section 9.08 hereof, any proceeds which result from such Event of Loss and are
paid to the Indenture Trustee shall be held by the Indenture Trustee as part of
the Trust Indenture Estate and, unless otherwise applied pursuant to Section
5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the
release of such damaged Airframe and the replacement thereof as herein
provided.
(b) Any amounts received directly or indirectly from any
governmental authority, insurer or other party pursuant to any provision of
Article 11 or 13 of the Lease as the result of loss or damage not constituting
an Event of Loss with respect to the Aircraft, or as a result of such loss or
damage constituting an Event of Loss (x) if and to the extent that such amounts
would at the time be required to be paid to the Lessee pursuant to said Article
11 or 13 but for the fact that an Event of Default shall have occurred and be
continuing or (y) are pledged to the Lessor as security in connection with an
Event of Loss in accordance with Section 11.03(e) of the Lease, shall be held
by the Indenture Trustee as security for the obligations of the Lessee under
the Lease and the Participation Agreement and shall be invested in accordance
with the terms of Section 5.08 hereof and at such time as the conditions for
payment to the Lessee specified in said Article 11 or 13, as the case may be,
shall be fulfilled and there shall not be continuing any Event of Default, such
amount, and the proceeds of any investment thereof, shall, to the extent not
theretofore applied, be paid to the Lessee to the extent provided in the Lease.
Section 5.03. Payment After Indenture Event of Default, etc.
Except as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05
hereof, all payments (other than Excepted Payments) received and all amounts
held or realized by the Indenture Trustee (a)after an Indenture Event of
Default shall have occurred and so long as such an Indenture Event of Default
shall be continuing, and the Indenture Trustee has commenced the exercise of
remedies pursuant to Article VIII hereof, or (b)after the Certificates shall
have become due and payable as provided in Section 7.02(b) or (c) hereof, shall
be promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required
to reimburse the Indenture Trustee for any tax, expense,
charge or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon
the tolls, rents, revenues, issues, products and profits
of, the property included in the Trust Indenture Estate
pursuant to Section 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously
reimbursed) (including, without limitation, the expenses
of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the Indenture
Trustee or the Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee or the Holders,
liquidated or otherwise, upon such Indenture Event of
Default) shall be applied by the Indenture Trustee as
between itself and the Holders in reimbursement of such
expenses;
second, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate unpaid
Principal Amount of all Series A Certificates, and the
accrued but unpaid interest and other amounts due thereon
and all other Secured Obligations (other than Make-Whole
Premium) in respect of the Series A Certificates to the
date of distribution, shall be distributed to the Holders
of Series A Certificates, and in case the aggregate amount
so to be distributed shall be insufficient to pay in full
as aforesaid, then ratably, without priority of one over
the other, in the proportion that the aggregate unpaid
Principal Amount of all Series A Certificates held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-Whole
Premium) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series A
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon (other than
Make-Whole Premium) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so
much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series B Certificates, and the accrued but
unpaid interest and other amounts due thereon and all
other Secured Obligations (other than Make-Whole Premium)
in respect of the Series B Certificates to the date of
distribution, shall be distributed to the Holders of
Series B Certificates, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid
Principal Amount of all Series B Certificates held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-
Whole Premium) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series B
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon (other than
Make-Whole Premium) to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so
much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal
Amount of all Series C Certificates, and the accrued but
unpaid interest and other amounts due thereon and all
other Secured Obligations (other than Make-Whole Premium)
in respect of the Series C Certificates to the date of
distribution, shall be distributed to the Holders of
Series C Certificates, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the
other, in the proportion that the aggregate unpaid
Principal Amount of all Series C Certificates held by each
holder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder (other than Make-
Whole Premium) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C
Certificates held by all such holders plus the accrued but
unpaid interest and other amounts due thereon (other than
Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this
clause "second" shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for
distribution pursuant to the Trust Agreement.
Section 5.04. Certain Payments. (a) Except as otherwise
provided in this Indenture, any payments received by the Indenture Trustee
which are to be applied according to any provision in any other Indenture
Document shall be applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon
receipt, any indemnity or other payment received by it from the Owner Trustee
or the Lessee in respect of (i) the Indenture Trustee in its individual
capacity, (ii) the Subordination Agent, (iii) each Liquidity Provider, and (iv)
the Pass Through Trustee, in each case whether pursuant to Article 8 or 9 of
the Participation Agreement or as Supplemental Rent, directly to the Person
(which may include the Indenture Trustee) entitled thereto. Any payment
received by the Indenture Trustee under clause (b) of the last paragraph of
Section 2.04 shall be distributed to the Subordination Agent to be distributed
in accordance with the terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein,
any sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly to
the Person or Persons entitled thereto.
Section 5.05. Other Payments. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is made
elsewhere in this Indenture or in any other Indenture Document (including
without limitation Article9 of the Lease) shall be distributed by the Indenture
Trustee (a) to the extent received or realized at any time prior to thepayment
in full of all obligations to the Holders, in the order of priority specified
in Section 5.01 hereof, and (b)to the extent received or realized at any time
after payment in full of all obligations to the Holders, in the following order
of priority:
first, in the manner provided in clause "first" of Section 5.03
hereof and
second, in the manner provided in clause "third" of Section 5.03
hereof.
Section 5.06. Payments to Owner Trustee. Any amounts
distributed hereunder by the Indenture Trustee to the Owner Trustee shall be
paid to the Owner Trustee by wire transfer of immediately available funds of
the type received by the Indenture Trustee at such office and to such account
or accounts of such entity or entities as shall be designated by notice from
the Owner Trustee to the Indenture Trustee from time to time. The Owner
Trustee hereby notifies the Indenture Trustee that unless and until the
Indenture Trustee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee hereunder for distribution in
accordance with the Trust Agreement shall be distributed by wire transfer of
immediately available funds of the type received by the Indenture Trustee to
such account of the Owner Participant as may be specified pursuant to Section
2.06 of the Trust Agreement.
Section 5.07. Application of Payments. Each payment of
principal of and interest or other amounts due on each Certificate shall,
except as otherwise provided herein, be applied,
first, to the payment of interest on such Certificate due and
payable to the date of such payment, as provided in such
Certificate, as well as any interest on overdue principal
and Make-Whole Premium, if any, and, to the extent
permitted by law, interest and other amounts due
thereunder,
second, to the payment of any other amount (other than the
principal of such Certificate) due hereunder to the Holder
of such Certificate or under such Certificate,
third, to the payment of the principal of such Certificate if
then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment
of the principal of such Certificate remaining unpaid
(provided that such Certificate shall not be subject to
prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02
hereof); provided that, solely for the purpose of
determining whether an Indenture Event of Default shall
have occurred and be continuing, each such payment shall
be deemed applied in the following order of priority:
first, in the manner provided in clause "first" above,
second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and
fourth, in the manner provided in clause "fourth" above.
Section 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment by
the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or this
Section 5.08 shall be invested by the Indenture Trustee from time to time in
securities selected by (i) so long as no Event of Default shall have occurred
and be continuing, the Lessee (and in the absence of written direction by the
Lessee, the Indenture Trustee shall invest such monies in direct obligations of
the United States of America) or (ii) so long as an Event of Default shall have
occurred and be continuing, the Indenture Trustee and in each case shall be of
the type listed in clauses (i) through (iv) of Section 23.01 of the Lease.
Unless otherwise expressly provided in this Indenture, any income realized as a
result of any such investment, net of the Indenture Trustee's reasonable fees
and expenses in making such investment, shall be held and applied by the
Indenture Trustee in the same manner as the principal amount of such investment
is to be applied and any losses, net of earnings and such reasonable fees and
expenses, shall be charged against the principal amount invested. The Lessee
shall be responsible for and will promptly pay to the Indenture Trustee or the
Lessor, as the case may be, on demand, the amount of any loss realized as the
result of any such investment (together with any fees, commissions and other
costs and expenses, if any, incurred by the Indenture Trustee or the Lessor in
connection with such investment), such amount to be disposed of in accordance
with the terms hereof or the Lease, as the case may be. The Indenture Trustee
shall not be liable for any loss resulting from any investment made by it under
this Indenture in accordance with instructions from the Lessee other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever the Indenture Trustee reasonably believes such sale is
necessary to make a distribution required by this Indenture.
Unless otherwise confirmed in writing, an account statement
delivered by the Indenture Trustee to the Owner Trustee (with a copy to the
Lessee) shall be deemed written confirmation by the Owner Trustee that the
investment transactions identified therein accurately reflect the investment
directions given to the Indenture Trustee by or on behalf of the Owner Trustee,
unless the Owner Trustee (or the Lessee on its behalf) notifies the Indenture
Trustee in writing to the contrary within 30 days of the date of receipt of
such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to the
contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of the
Participation Agreement, if the Lessee is required to pay any such Tax, or any
interest or penalty thereon, or to indemnify the Owner Participant or the Owner
Trustee with respect thereto pursuant to Section 8.01(c) of the Participation
Agreement, the Lessee shall be entitled to receive any payments otherwise
distributable to the Holder of any Certificate who was subject to such Tax
pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts shall have
been recovered in full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
Section 6.01. No Prepayment Prior to Maturity. Except as
provided in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be
prepaid prior to their respective Maturities.
Section 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part except under clause
(viii) below):
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 11.03 of the Lease and Section
9.08 hereof replacement equipment is substituted therefor).
(ii) If the Lessee, pursuant to Section 4.02(a) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.12 hereof shall
not be applicable in connection with such purchase), but subject to
Section 6.02(c) below.
(iii) If the Owner Participant or the Owner Trustee on behalf of
the Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof (unless such notice is revoked in
accordance with such Section).
(iv) If the Lessee, pursuant to Section 10.01 of the Lease,
gives notice of a voluntary termination for obsolescence or surplus, but
subject to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement
in connection with a refinancing of the Certificates, but subject to
Section 6.02(c) below.
(vi) [Reserved].
(vii) At the option of the Owner Trustee with the prior written
consent of the Lessee upon not less than 25 days' prior written notice.
(viii) With respect to the Series C Certificates only, as
provided in Section 2.03(b) of the Original Participation Agreement.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Article15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to Section 6.02(c) hereof)
written notice to the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Certificates shall be
prepaid. In the case of a prepayment of the Certificates pursuant to Section
6.02(a)(i) above, the Certificates shall be prepaid in full on the Loss Payment
Date as defined in Section 11.02 of the Lease. In the case of a prepayment of
the Certificates pursuant to Section 6.02(a)(iii) above, the Certificates shall
be prepaid in full on the date so designated in the notice referred to in
Section 8.02 hereof. In the case of a prepayment of the Certificates pursuant
to Section 6.02(a)(ii) or (iv) above, the Certificates shall be prepaid in full
on the Termination Date. In the case of a prepayment of the Certificates
pursuant to Section 6.02(a)(v) above, the Certificates shall be prepaid on the
effective date of the Refinancing. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(vii) above, the Certificates shall be
prepaid on the date designated in the notice referred to therein. In the case
of a prepayment of the Series C Certificates pursuant to Section 6.02(a)(viii)
above, the amount of such Series C Certificates to be prepaid shall be prepaid
on the Series C Prepayment Date. The day on which the Certificates are to be
prepaid pursuant to this Section 6.01(b) is herein referred to as the
"Prepayment Date".
On or prior to the Prepayment Date, immediately available funds
shall be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) in the event of a prepayment of the Certificates pursuant to
Section 6.02(a)(i), 6.02(a)(iii) (if clause (i) of the first sentence of
Section 8.02(a) hereof is applicable) or 6.02(a)(viii) or, if such
prepayment is made on or after the applicable Premium Termination Date,
6.02(a)(ii), 6.02(a)(iii) (if clause (ii) of the first sentence of Section
8.02(a) hereof is applicable), 6.02(a)(iv), 6.02(a)(v) or 6.02(a)(vii)
above, the sum of (A) the aggregate principal amount of such Certificates
then Outstanding, (B) accrued interest on the Certificates to the
Prepayment Date and (C) all other aggregate sums due the Indenture Trustee
hereunder or under the Participation Agreement or the Lease, but excluding
any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date, in the event of a prepayment of the Certificates
pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause (ii) of the first
sentence of Section8.02(a) hereof is applicable), 6.02(a)(iv), 6.02(a)(v)
or 6.02(a)(vii) above, the sum of the amounts specified in clauses (A),
(B) and (C) of the preceding clause (1) plus any Make- Whole Premium
payable in respect of all Certificates with respect to which the Premium
Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section10.01(f) of the
Lease, no Termination Date shall occur, or if no refinancing shall occur
pursuant to Section 15.01 of the Participation Agreement, the Lessee shall give
notice thereof to the Indenture Trustee, and the prepayment proposed to be
effected in respect thereof shall not occur.
Section 6.03. Notice of Prepayment to Holders. In order to
effect any prepayment set forth in Section 6.02(a) hereof, the Indenture
Trustee shall give prompt notice by first class mail of prepayment to each
Holder of an Outstanding Certificate. Such notice may be revoked by the Owner
Trustee at any time on or before the Prepayment Date by prompt notice to the
Holders except as otherwise provided in the Lease or the Participation
Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions
hereof, the Prepayment Price will become due and payable, and
that interest on the Certificates shall cease to accrue on and
after such Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
Section 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price. On the Prepayment Date or the Sinking Fund Redemption Date
(as defined in Section 6.06 hereof), the Owner Trustee shall, to the extent an
amount equal to the Prepayment Price or the Sinking Fund Redemption Price (as
defined in Section 6.06 hereof), as the case may be, shall not then be held in
cash or Permitted Investments (marked-to-market net of all costs and expenses
of liquidation thereof) by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment Price
or the Sinking Fund Redemption Price, as the case may be. If there shall so be
on deposit and/or deposited the applicable Prepayment Price or Sinking Fund
Redemption Price on or prior to a Prepayment Date or Sinking Fund Redemption
Date, interest shall cease to accrue in respect of all or, in the case of a
mandatory sinking fund redemption, the relevant portion being prepaid of, the
Outstanding Certificates on and after such Prepayment Date or such Sinking Fund
Redemption Date.
Section 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof or (B) as otherwise provided in the
Lease) become due and payable and from and after such Prepayment Date (unless
there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of its
Certificate for prepayment in accordance with said notice, such Holder shall be
paid the principal amount of its Certificate then outstanding, accrued interest
thereon to the Prepayment Date, all other sums due to such Holder hereunder,
under the Participation Agreement or the Lease, plus, if a Make-Whole Premium
is payable pursuant to Section6.02(b) hereof, the Make-Whole Premium in respect
of such Certificate.
If any Certificate called for prepayment shall not be so paid
upon surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Certificate.
Section 6.06. Mandatory Sinking Fund Redemption. The
Certificates shall be subject to partial redemption, at the aggregate principal
amount set forth for the Certificates of the respective Series and Maturity, on
a pro rata basis, on each date specified on Schedule I attached hereto (a
"Sinking Fund Redemption Date") for such payment on the Certificates of such
Series and Maturity. The Owner Trustee shall deposit funds sufficient to pay
the Sinking Fund Redemption Price with the Indenture Trustee as provided in
Section 6.04 hereof. The Indenture Trustee shall pay from the amounts so
deposited on each applicable Sinking Fund Redemption Date to the Certificates
of each Series in the order of priority set forth in clause "first" of Section
5.01 hereof and among the Holders of the Certificates of each Series then
Outstanding on a pro rata basis the aggregate principal amount set forth on
Schedule I attached hereto, together with accrued interest to such Sinking Fund
Redemption Date, but without Make-Whole Premium (the "Sinking Fund Redemption
Price").
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease
(other than an Event of Default arising solely as the result of the
failure to make an Excepted Payment unless the Owner Participant shall
notify the Indenture Trustee in writing that such failure shall constitute
an Indenture Event of Default); or
(ii) any failure of the Owner Trustee to (A) observe any of its
covenants in the fifth paragraph following the Habendum Clause hereof or
Section 3.05(b)(iii) hereof or Section 7.02(b) of the Participation
Agreement (unless otherwise removed as Owner Trustee within 10 days after
notice thereof to the Owner Participant or (B) observe or perform any
other covenant or obligation of the Owner Trustee in this Indenture (other
than any such failure arising by reason of an Event of Default or
specified in clause (iii) below) and the continuance of such failure for a
period of thirty (30) days or, if such covenant is capable of cure and the
Owner Trustee is diligently proceeding to effect such cure, 120 days,
after written notice thereof identified as a "Notice of Indenture Event of
Default" to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates specifying such failure to so observe
or perform and requiring it to be remedied; or
(iii) the failure of the Owner Trustee other than by reason of a
Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Certificate when due, and such failure
shall have continued unremedied for ten (10) Business Days after the date
when due or (ii)to pay any other amounts hereunder or under the
Certificates when due and such failure shall have continued unremedied for
a period of thirty (30) days after the Owner Trustee and the Owner
Participant shall receive written demand therefor from the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates; or
(iv) (A) any representation or warranty made by SSB, the Owner
Trustee, the Owner Participant or the Owner Participant Guarantor or any
Owner Trustee Guarantor, in Article 7 of the Participation Agreement, in
Section 5.01 of the Lease, in the Owner Participant Guaranty or in any
certificate of SSB, the Owner Trustee, the Owner Participant, or the Owner
Participant Guarantor furnished to the Indenture Trustee or any Holder in
connection herewith or therewith or pursuant hereto or thereto shall prove
to have been incorrect when made and was and remains in any respect
material to the Holders, and such misrepresentation shall not have been
corrected within 30 days following notice thereof identified as a "Notice
of Indenture Event of Default" being given to the Owner Trustee and the
Owner Participant by the Indenture Trustee or by the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates; or
(B) any covenant made by SSB or the Owner Trustee in the
Participation Agreement, or by the Owner Participant or the Owner
Participant Guarantor in Article 7 of the Participation Agreement or in
the Owner Participant Guaranty shall be breached in any respect and such
breach shall remain unremedied for a period of thirty (30) days after
there has been given to the Owner Trustee and the Owner Participant by the
Indenture Trustee or by Certificate Holders of not less than 25% in
aggregate principal amount of Outstanding Certificates a written notice
identified as a "Notice of Indenture Event of Default" specifying such
breach and requiring it to be remedied; or
(v) the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or the Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation;
(vi) an order for relief shall be entered in respect of the
Owner Trustee or the Lessor's Estate or any Owner Trustee Guarantor or the
Owner Participant or the Owner Participant Guarantor by a court having
jurisdiction in the premises in an involuntary case under the federal
bankruptcy laws as now or hereafter in effect; or the Owner Trustee or the
Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant or
the Owner Participant Guarantor shall file any answer admitting or not
contesting the material allegations of a petition filed against the Owner
Trustee or the Lessor's Estate or any Owner Trustee Guarantor or the Owner
Participant or the Owner Participant Guarantor in any proceeding referred
to in clause (vi) below or seek or consent or acquiesce in the appointment
of any trustee, custodian, receiver or liquidator of the Owner Trustee or
the Lessor's Estate or any Owner Trustee Guarantor or the Owner
Participant or the Owner Participant Guarantor, as the case may be, or of
all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner Trustee
or the Lessor's Estate or any Owner Trustee Guarantor or the Owner
Participant or the Owner Participant Guarantor, as the case may be, an
order shall be entered constituting an order for relief or approving a
petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar statute, law or regulation, or if any
such petition shall be filed against the Owner Trustee or the Lessor's
Estate or any Owner Trustee Guarantor or the Owner Participant or the
Owner Participant Guarantor, as the case may be, and such petition shall
not be dismissed within 90 days, or if, without the consent or
acquiescence of the Owner Trustee or the Lessor's Estate or any Owner
Trustee Guarantor or the Owner Participant or the Owner Participant
Guarantor, as the case may be, an order shall be entered appointing a
trustee, custodian, receiver or liquidator of the Owner Trustee or the
Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant or
the Owner Participant Guarantor, as the case may be, or of all or any
substantial part of the properties of the Owner Trustee or the Lessor's
Estate or any Owner Trustee Guarantor or the Owner Participant or the
Owner Participant Guarantor, as the case may be, and such order shall not
be dismissed within 90 days; or
(viii) any Owner Trustee Guaranty or the Owner Participant
Guaranty shall cease to be a valid and enforceable obligation of any Owner
Trustee Guarantor or the Owner Participant Guarantor, as the case may be,
or otherwise shall not be in full force and effect.
Section 7.02. Remedies. (a) If an Indenture Event of Default
shall have occurred and be continuing and so long as the same shall be
continuing unremedied, then and in every such case, the Indenture Trustee may,
and when required by the provisions of Article IX or Section7.02(c) hereof,
shall (i) exercise any or all of the rights and powers and pursue any and all
of the remedies pursuant to this Article VII and (ii) in the event such
Indenture Event of Default is an Indenture Event of Default referred to in
clause (i) of Section 7.01 hereof, exercise any and all of the remedies
pursuant to Article 17 of the Lease; provided that without the consent of the
Owner Trustee such exercise of remedies shall not occur until after the latest
date on which the Owner Trustee may cure the related Event of Default pursuant
to Section 8.03 hereof. The Indenture Trustee may take possession of all or
any part of the properties covered or intended to be covered by the Lien and
security interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee and
all Persons claiming under any of them wholly or partly therefrom. In
addition, the Indenture Trustee may exercise any other right or remedy in lieu
of or in addition to the foregoing that may be available to it under applicable
law, or proceed by appropriate court action to enforce the terms hereof, of the
Lease, or both, or to rescind the Lease. Without limiting any of the
foregoing, it is understood and agreed that the Indenture Trustee may exercise
any right of sale of the Aircraft available to it, even though it shall not
have taken possession of the Aircraft and shall not have possession thereof at
the time of such sale.
Notwithstanding the foregoing, it is understood and agreed that
if the Indenture Trustee shall proceed to foreclose the Lien of this Indenture,
it shall substantially simultaneously therewith, to the extent the Indenture
Trustee is then entitled to do so hereunder and under the Lease, and is not
then stayed or otherwise prevented from doing so, proceed (to the extent it has
not already done so) to declare the Lease in default and commence the exercise
in good faith of one or more of the remedies under Section 17.01(a)(i), (ii),
or (vi) of the Lease (as it shall determine in its sole discretion). It is
further understood and agreed that if the Indenture Trustee is unable to
exercise one or more remedies under Article 17 of the Lease because of any stay
or operation or law or otherwise, the Indenture Trustee shall not be entitled
to foreclose the Lien of this Indenture (A) until the earlier of (i) 60 days
from the date of any such stay or applicable order under Section 1110 of the
Bankruptcy Code including any extension consented to by the Indenture Trustee
or the Holders of Certificates of such period permitted under Section 1110(b)
of the Bankruptcy Code and (ii) the date of actual repossession of the Aircraft
by the Indenture Trustee or (B) if the Lessee has agreed to perform or assume
the Lease and no Event of Default other than as specified in Section 16.01(e),
(f) or (g) of the Lease shall be continuing. For the avoidance of doubt, it is
expressly understood and agreed that except as aforesaid the above-described
inability of the Indenture Trustee to exercise any right or remedy under the
Lease shall in no event and under no circumstances prevent the Indenture
Trustee from exercising all of its rights, powers and remedies under this
Indenture, including, without limitation, this Article VII. The Indenture
Trustee further agrees that notice of intent to foreclose shall be given to the
Owner Trustee at the earlier of the commencement of any proceeding or at least
30 days prior to the consummation of foreclosure of the Lien of this Indenture.
(b) If an Indenture Event of Default under clause (v), (vi) or
(vii) of Section 7.01 hereof shall occur and be continuing, the unpaid
principal of all Outstanding Certificates, together with interest accrued but
unpaid thereon and all other amounts due thereunder, but without Make-Whole
Premium, shall immediately become due and payable, without presentment, demand,
protest or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the
preceding paragraph (b) shall have occurred and be continuing, then and in
every such case, the Indenture Trustee may on its own accord or at the
direction of Holders of not less than 25% in aggregate principal amount of
Outstanding Certificates, at any time, by written notice to the Owner Trustee
and the Lessee, declare the principal of all the Certificates to be due and
payable, whereupon the unpaid principal amount of all Outstanding Certificates,
together with accrued interest thereon and all other amounts due thereunder,
but without Make-Whole Premium, shall immediately become due and payable
without presentment, demand, protest or other notice, all of which are hereby
waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but
only to the extent that an amount equal to such purchase price would have been
paid to such Holder pursuant to Article V hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (d) were not given
effect).
Section 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Trust Indenture Estate to which the
Indenture Trustee shall at the time be entitled under this Indenture. Subject
to the foregoing, if the Owner Trustee shall for any reason fail to execute and
deliver such documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
or an agent or representative designated by the Indenture Trustee, the right to
immediate possession and requiring the Owner Trustee to execute and deliver
such instruments and documents to the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents, and (ii) pursue all or
part of such Trust Indenture Estate wherever it may be found and enter any of
the premises of the Lessee or the Owner Trustee wherever such Trust Indenture
Estate may be or be supposed to be and search for such Trust Indenture Estate
and take possession of and remove such Trust Indenture Estate. All expenses of
obtaining such judgment or of pursuing, searching for and taking such Trust
Indenture Estate shall, until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee
may, from time to time, at the expense of the Trust Indenture Estate, make all
such expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In each
case subject to Section 7.02 hereof, the Indenture Trustee shall have the right
to maintain, use, operate, store, lease, control or manage the Trust Indenture
Estate and to carry on the business and to exercise all rights and powers of
the Owner Trustee relating to the Trust Indenture Estate, as the Indenture
Trustee may reasonably deem best, including the right to enter into any and all
such agreements with respect to the maintenance, insurance, use, operation,
storage, leasing, control, management or disposition of all or any part of the
Trust Indenture Estate as the Indenture Trustee may determine. Further, the
Indenture Trustee shall be entitled to collect and receive directly all tolls,
rents (including Rent), revenues, issues, income, products and profits of the
Trust Indenture Estate other than Excepted Payments, without prejudice,
however, to the right of the Indenture Trustee under any provision of this
Indenture to collect and receive all cash held by, or required to be deposited
with, the Indenture Trustee under this Indenture. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the use, operation, storage, leasing, control, management, or
disposition of the Trust Indenture Estate, and of all maintenance and repairs,
and to make all payments which the Indenture Trustee may be required or may
reasonably elect to make for any taxes, assessments, insurance or other proper
charges upon the Trust Indenture Estate (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee and the Lessee), and all other payments
which the Indenture Trustee may be required or authorized to make under any
provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee and of all persons properly engaged and
employed for such purposes by the Indenture Trustee; provided, that any excess
amounts shall be promptly distributed in accordance with Section 5.03 hereof.
(c) If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder, and subject to Article VIII hereof, the Indenture Trustee, either
with or without taking possession, and either before or after taking
possession, and without instituting any legal proceedings whatsoever, may sell,
assign, transfer and deliver the whole or, from time to time, to the extent
permitted by law, any part of the Trust Indenture Estate, or any part thereof,
or interest therein, at any private sale or public auction, with or without
demand, advertisement or notice, except as expressly provided for below in this
Section7.03(c), for cash or credit or for other property, for immediate or
future delivery, and for such price or prices and on such terms as the
Indenture Trustee in its sole discretion may determine; provided, that any such
action shall be at the time lawful and that all mandatory legal requirements
shall be complied with. Any notice required pursuant to the terms hereof in
the case of a public sale, shall state the time and place fixed for such sale.
Any such public sale shall be held at such time or times within ordinary
business hours as the Indenture Trustee shall fix in the notice of such sale.
At any such sale, the Trust Indenture Estate may be sold in one lot as an
entirety or in separate lots. The Indenture Trustee shall not be obligated to
make any sale pursuant to such notice. The Indenture Trustee may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
such sale, and any such sale may be made at any time or place to which the same
may be so adjourned without further notice or publication. The Indenture
Trustee may exercise such right of sale without possession or production of the
Certificates or proof of ownership thereof, and as representative of the
Holders may exercise such right without notice to the Holders or without
including the Holders as parties to any suit or proceedings relating to the
foreclosure of any part of the Trust Indenture Estate. The Owner Trustee shall
execute any and all such bills of sale, assignments and other documents, and
perform and do all other acts and things requested by the Indenture Trustee in
order to permit consummation of any sale of the Trust Indenture Estate in
accordance with this Section 7.03(c) and to effectuate the transfer or
conveyance referred to in the first sentence of this Section7.03(c).
Notwithstanding any other provision of this Indenture, the Indenture Trustee
shall not sell the Trust Indenture Estate or any part thereof unless the
Certificates shall have been accelerated.
(d) To the extent permitted by applicable law, the Indenture
Trustee or any Holder may be a purchaser of the Trust Indenture Estate or any
part thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Certificates secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder, under any other
Indenture Document or under the Certificates held by such Holder to the extent
of such portion of the purchase price as it would have received had it been
entitled to share any distribution thereof. The Indenture Trustee or any
Holder or nominee thereof shall, upon any such purchase, acquire good title to
the property so purchased, free of the Lien of this Indenture and, to the
extent permitted by applicable law, free of all rights of redemption in the
Owner Trustee or the Owner Participant in respect of the property so purchased.
(e) Subject to Article VIII hereof, and effective upon the
occurrence and continuance of an Indenture Event of Default, the Owner Trustee
hereby irrevocably appoints and constitutes the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale or otherwise, to execute and deliver all such
bills of sale, assignments and other instruments as the Indenture Trustee may
consider necessary or appropriate, with full power of substitution, and the
Owner Trustee hereby ratifies and confirms all that such attorney or any
substitute shall lawfully do by virtue hereof. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(f) The Indenture Trustee shall, as a matter of right, be
entitled to the appointment of a receiver (who may be the Indenture Trustee or
any successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of the
Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
(g) Any sale of the Trust Indenture Estate or any part thereof
or any interest therein, whether pursuant to foreclosure or power of sale or
otherwise hereunder, shall be a perpetual bar against the Owner Trustee after
the expiration of the period, if any, during which the Owner Trustee shall have
the benefit of prepayment laws which may not be waived pursuant to Section7.13
hereof.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Section 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Owner Trustee
or its property, or in case of any other comparable judicial proceedings
relative to the Owner Trustee, or to the creditors or property of the Owner
Trustee, the Indenture Trustee, irrespective of whether the principal of the
Certificates shall then be due and payable as therein or herein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or property
of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders in any election of a trustee or a standby trustee
in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Holders and of the Indenture Trustee on
their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Indenture Trustee to vote in respect of the claim of any
Holder in any such proceeding except, as aforesaid, to vote for the election of
a trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power
and remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture or to enforce any other legal or equitable right
vested in the Indenture Trustee or the Holders by this Indenture or by law;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Section 7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Holder shall have instituted any proceeding to enforce
any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and all
rights, remedies and powers of the Indenture Trustee and the Holders shall
continue as if no such proceeding had been instituted.
Section 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously shall
have given to the Indenture Trustee written notice of an Indenture Event of
Default shall then have occurred and be continuing, as hereinbefore provided,
and the Holders of not less than 25% in aggregate principal amount of
Outstanding Certificates shall have made written request upon the Indenture
Trustee to institute such action or proceedings in its own name as trustee
hereunder and shall have offered to the Indenture Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby and the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity shall have failed to
institute any such action or proceedings and no direction inconsistent with
such written request shall have been given to the Indenture Trustee pursuant to
Section 7.10 hereof; it being understood and intended, and being expressly
covenanted by the Holder of each Certificate with every other Holder of each
other Certificate and the Indenture Trustee, that no one or more Holders shall
have any right in any manner whatever to affect, disturb or prejudice the
rights of any other Holder or the Lien of this Indenture or any part of the
Trust Indenture Estate or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 7.09. Unconditional Right of Holders to Receive
Principal, Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of and
interest and Make-Whole Premium, if any, on such Certificate on or after the
respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not be
impaired or affected without the consent of such Holder.
Section 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent provided
in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so determine
that the actions or forebearances specified in or pursuant to such direction
shall be unduly prejudicial to the interests of Holders not joining in the
giving of said direction, it being understood that (subject to Section 9.02
hereof) the Indenture Trustee shall have no duty to ascertain whether or not
such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
Section 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Indenture Default or impair any right consequent thereon;
provided, however, that in the absence of written instructions from all Holders
and each Liquidity Provider, the Indenture Trustee shall not waive any
Indenture Default (a) in the payment of the principal of or Make-Whole Premium,
if any, or interest on, or other amounts due under, any Certificate then
Outstanding, or (b) in respect of a covenant or provision of this Indenture
which, under Article XIII hereof, cannot be modified or amended without the
consent of each Holder.
Section 7.12. Notice of Indenture Default. The Indenture
Trustee shall transmit to the Owner Trustee, the Holders and to the Owner
Participant notice of any Indenture Defaults actually known to a Responsible
Officer of the Indenture Trustee, such notice to be transmitted by mail to the
Holders within 90 days, and to the Owner Trustee and the Owner Participant
promptly after the occurrence thereof, unless such Indenture Default shall have
been cured before the giving of such notice; provided that under no
circumstances shall the Indenture Trustee give such notice to the Holders until
the expiration of a period of 60 days from the occurrence of such Indenture
Default; and provided further that, except in the case of default in the
payment of the principal of or interest on or any other amount due under any of
the Certificates, the Indenture Trustee shall be protected in withholding such
notice to the Holders if and so long as the board of directors, the executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers of the Indenture Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
Section 7.13. Waiver of Appraisement, etc.; Laws. The Owner
Trustee covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any appraisement, valuation, stay, extension or
prepayment law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or the execution
of any power granted herein to the Indenture Trustee, or the absolute sale of
the Trust Indenture Estate, or any part thereof, or the possession thereof by
any purchaser at any sale under this Article VII; and the Owner Trustee for
itself and all who may claim under it, so far as it or any of them now or
hereafter lawfully may, hereby waives the benefit of all such laws. The Owner
Trustee for itself and all who may claim under it waives, to the extent that it
lawfully may, all right to have the property in the Trust Indenture Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Indenture may order the sale of the Trust
Indenture Estate as an entirety.
If any law referred to in this Section 7.13 and now in force, of
which the Owner Trustee or its successors might take advantage despite this
Section 7.13, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 7.13.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner
Participant. (a) Subject to Section 13.01 hereof, without the consent of a
Majority in Interest of Certificate Holders, the respective parties to the
Indenture Documents may not modify, amend or supplement any of said agreements,
or give any consent, waiver, authorization or approval thereunder, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of the
respective parties thereunder; provided, however, that the actions specified in
subsection (b) of this Section 8.01 may be taken without the consent of the
Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the respective parties to the Indenture Documents, at any time and from
time to time, without the consent of the Indenture Trustee or of any Holder,
may:
(1) so long as no Indenture Event of Default shall have occurred
and be continuing, modify, amend or supplement the Lease, or give any
waiver with respect thereto, except that without compliance with
subsection (a) of this Section 8.01 the parties to the Lease shall not
modify, amend or supplement, or give any waiver for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the following provisions of
the Lease as in effect on the effective date hereof: Article 2 (provided
that, if in respect of the Term, the result thereof would not be to
shorten the Term of the Lease to a period shorter than the period ending
with the Maturity of any Certificate), Section 3.03 (except to the extent
such Section relates to amounts payable (whether directly or pursuant to
this Indenture) to Persons other than Holders, each Liquidity Provider,
the Subordination Agent and the Indenture Trustee in its individual
capacity), Section 3.05, Section 3.06 (except insofar as it relates to the
address or account information of the Owner Trustee or the Indenture
Trustee) (other than as such Sections 3.03, 3.05 and 3.06 may be amended
pursuant to Section 3.04 of the Lease as in effect on the effective date
hereof), Section 5.01, Article 6, Article 10 (except that further
restrictions may be imposed on the Lessee), Article 11 (except that
additional requirements may be imposed on the Lessee), Article 13 (except
for Section 13.05 and except that additional insurance requirements may be
imposed on the Lessee), Article 14 (except in order to increase the
Lessee's liabilities or enhance the Lessor's rights thereunder), Article
15 (except in the case of an assignment by the Lessor in circumstances
where the Aircraft shall remain registrable under the Transportation
Code), Section 16.01 (except to impose additional or more stringent Events
of Default), Article 17 (except to impose additional remedies), Section
19.01 (except to impose additional requirements on the Lessee), Section
20.01, Article 22, Section23.01, Section 26.03 and any definition of terms
used in the Lease, to the extent that any modification of such definition
would result in a modification of the Lease not permitted pursuant to this
subsection (b); provided that the parties to the Lease may take any such
action without the consent of the Indenture Trustee or any Holder to the
extent such action relates to the payment of amounts constituting, or the
Owner Trustee's, the Owner Participant's or the Lessee's rights or
obligations with respect to, Excepted Payments (other than the place, time
and manner of payment of Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any
other Indenture Document (other than the Lease and the Participation
Agreement), or give any consent, waiver, authorization or approval with
respect thereto, in each case only to the extent any such action shall not
adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with subsection (a) of this Section 8.01
the parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following
provisions of the Participation Agreement as in effect on the effective
date hereof: Articles 6, 8 and 9 and Section 10.01(b) (insofar as such
Articles 6, 8 and 9 and Section 10.01(b) relate to the Indenture Trustee,
the Pass Through Trustee and the Holders), Article 7 and Sections 3.05,
15.01, 17.02 and 17.11 and any definition of terms used in the
Participation Agreement, to the extent that any modification of such
definition would result in a modification of the Participation Agreement
not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order
to cure any ambiguity, to correct or supplement any provisions thereof
which may be defective or inconsistent with any other provision thereof or
of any provision of this Indenture, or to make any other provision with
respect to matters or questions arising thereunder or under this Indenture
which shall not be inconsistent with the provisions of this Indenture,
provided the making of any such other provision shall not adversely affect
the interests of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without the
consent of the Holder of each Outstanding Certificate affected thereby, and
each Liquidity Provider,
(1) modify, amend or supplement the Lease in such a way as to
extend the time of payment of Basic Rent or Stipulated Loss Value or
Supplemental Rent payable to the Holders or any Liquidity Provider or any
other amounts payable to the Indenture Trustee for its own account or for
the account of the Holders or any Liquidity Provider (subject in any event
to Section 3.05 of the Lease) upon the occurrence of an Event of Loss or
Termination Value and any other amounts payable to the Indenture Trustee
for its own account or for the account of the Holders (subject in any
event to Section 3.05 of the Lease) upon termination of the Lease with
respect to the Aircraft payable under, or as provided in, the Lease as in
effect on the effective date hereof, or reduce the amount of any
installment of Basic Rent or Supplemental Rent so that the same is less
than the payment of principal of, and interest on the Certificates and
Make-Whole Premium, if any, and amounts due to each Liquidity Provider, as
the case may be, to be made from such installment of Basic Rent or
Supplemental Rent, or reduce the aggregate amount of Stipulated Loss
Value, or any other amounts payable under, or as provided in, the Lease as
in effect on the effective date hereof upon the occurrence of an Event of
Loss so that the same is less than the accrued interest on and the
principal as of the Loss Payment Date, of the Certificates at the time
Outstanding or reduce the amount of Termination Value and any other
amounts payable under, or as provided in, the Lease as in effect on the
effective date hereof upon termination of the Lease with respect to the
Aircraft so that the same is less than the accrued interest on and
principal as of the Lease Termination Date and Make-Whole Premium, if any,
of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to,
or consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
absolute and unconditional obligations in respect of payment of Basic Rent
or Supplemental Rent, or Stipulated Loss Value and any other amounts
payable to the Indenture Trustee for its own account or the account of the
Holders (subject in any event to Section 3.05 of the Lease) upon the
occurrence of an Event of Loss, or Termination Value and any other amounts
payable to the Indenture Trustee for its own account or the account of the
Holders (subject in any event to Section 3.05 of the Lease) of the Lease
with respect to the Aircraft, payable under, or as provided in, the Lease
as in effect on the effective date hereof, except for any such assignment
pursuant to Section 2.12 hereof, and except as provided in the Lease as in
effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the
consent of the Owner Trustee (at the direction of the Owner Participant) shall
be required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive compliance
by the Lessee with any of its obligations thereunder, (ii) to grant any consent
requested under the Lease and (iii) to exercise discretion on the Lessee's
option to substitute a Replacement Airframe or Replacement Engines after an
Event of Loss pursuant to the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
Section 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf of
the Owner Participant) may, but shall be under no obligation to, do either of
the following:
(1) direct the Owner Trustee to cause the prepayment of all, but
not less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable and shall designate a Prepayment Date
which shall be a Business Day and which shall be not less than 30 days
after the date of such notice on which the Owner Trustee shall, in the
manner provided for in Section 6.04 hereof, deposit the sum of amounts
contemplated by paragraph "first" under Section 5.03 and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee. If
such payment by the Owner Trustee to the Indenture Trustee is made, the
Certificates shall cease to accrue interest from and after the Prepayment
Date, and after distribution of such payment to the Holders, the Indenture
Trustee shall release the Trust Indenture Estate from the Lien of this
Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable and
shall designate a date which shall be a Business Day and which shall be
not less than 30 days after the date of such notice on which the Owner
Trustee shall pay to the Indenture Trustee an amount equal to the
aggregate unpaid principal amount of all Outstanding Certificates,
together with accrued interest on such amount to the date of purchase, the
aggregate amount of any Make-Whole Premium applicable to each Outstanding
Certificate (if such purchase occurs prior to the Premium Termination Date
for such Outstanding Certificate) in the case of a purchase pursuant to
clause (a)(ii) above, plus all other sums due any Holder or the Indenture
Trustee hereunder or under the Participation Agreement or the Lease. Upon
receipt of the Indenture Trustee of such amount, each Holder will be
deemed, whether or not Certificates shall have been delivered to the
Indenture Trustee on such date, to have thereupon sold, assigned,
transferred and conveyed (and shall promptly take such actions as the
Owner Participant shall reasonably request to evidence such sale,
assignment, transfer and conveyance) to the Owner Participant (without
recourse or warranty of any kind except for its own acts), all of the
right, title and interest of such Holder in and to the Trust Indenture
Estate and this Indenture and all Certificates held by such Holder and the
former Holders shall not be entitled to receive any interest on the
principal amount of such Certificates after the purchase date, and the
Owner Participant shall be deemed to have assumed (and shall promptly take
such actions as any Holder shall reasonably request to evidence such
assumption) all of such Holder's obligations under the Participation
Agreement and this Indenture arising subsequent to such sale. If the
Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Certificates to
be issued to the Owner Participant in such authorized denominations as the
Owner Participant shall request. All charges and expenses required
pursuant to Section 2.06 hereof in connection with the issuance of any
such new Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the
applicable Prepayment Price or purchase price with the Indenture Trustee
pursuant to Section 8.02(a) hereof, the Owner Trustee shall be entitled to
exercise all remedies of the Indenture Trustee under Article VII hereof as well
as of the Lessor under the Lease.
Section 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such installment
of Basic Rent or of interest on account of such installment's being overdue
shall not constitute or result in an Indenture Event of Default under this
Indenture and any declaration based solely on the same shall be deemed to be
automatically rescinded. Nothing contained in the preceding sentence shall be
deemed to entitle the Owner Trustee to exercise any rights and powers or pursue
any remedies pursuant to Article 17 of the Lease or otherwise except as set
forth in this Indenture, and except that the Owner Trustee or the Owner
Participant may attempt to recover any amount paid by it or them under this
Indenture by demanding of the Lessee payment of such amount, or by commencing
an action at law against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee pursuant to
Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon
curing any such Event of Default pursuant to this Section 8.03, the Owner
Trustee or the Owner Participant, as the case may be, shall, so long as no
Indenture Event of Default shall have occurred and be continuing, be subrogated
on an unsecured basis to all the rights of the Indenture Trustee under the
Lease in respect of the payment giving rise to such Event of Default, and any
right to any interest in respect of the same, and shall be entitled to any
payment of Basic Rent (or interest thereon) actually made by the Lessee in
respect of such cured payment upon receipt by the Indenture Trustee; provided
that no such amount shall be paid to the Owner Trustee or the Owner Participant
until all amounts then due and payable to each Certificate Holder hereunder and
thereunder shall have been paid in full and no Indenture Event of Default shall
have occurred and be continuing. Notwithstanding anything in this Indenture or
the Lease to the contrary, the Owner Participant and the Owner Trustee
collectively, shall not be entitled to cure more than six (6) Events of Default
(no more than three (3) of which may be consecutive) occasioned by defaults in
the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease
for any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after such Event of
Default, then the failure of the Lessee to perform such covenant, condition or
agreement, the observance or performance of which was accomplished by the Owner
Trustee hereunder shall not constitute or result in an Indenture Event of
Default under this Indenture and any declaration based solely on the same shall
be deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee or the Owner Participant
to exercise any rights and powers or pursue any remedies pursuant to Article 17
of the Lease or otherwise except as set forth in this Indenture, and except
that the Owner Trustee or the Owner Participant may attempt to recover any
amount paid by it or them in effecting such cure by demanding of the Lessee
payment of such amount, plus any interest due, or by commencing an action at
law against the Lessee for the payment of such amount or taking appropriate
action in a pending action at law against the Lessee pursuant to Section
17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any
such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or
the Owner Participant, as the case may be, shall be subrogated to all the
rights of the Indenture Trustee under the Lease in respect of the payment,
agreement or covenant giving rise to such Event of Default, and any right to
any interest in respect of the same, and shall be entitled to any payment or
other performance upon receipt by the Indenture Trustee; provided that no such
amount shall be paid to the Owner Trustee or the Owner Participant until all
amounts then due and payable to each Certificate Holder hereunder and
thereunder shall have been paid in full and no Indenture Event of Default shall
have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee
hereby accepts the trusts imposed upon it by this Indenture, and covenants and
agrees to perform the same as expressed herein and agrees to receive and
disburse all moneys constituting part of the Trust Indenture Estate in
accordance with the terms hereof.
Section 9.02. Duties and Responsibilities of the Indenture
Trustee; During an Indenture Event of Default; Prior to an Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture. In case an
Indenture Event of Default has occurred (which has not been cured or waived)
the Indenture Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default
and after the curing or waiving of all Indenture Events of Default which may
have occurred:
(x) the duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read in to this Indenture against the
Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action taken or not taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of Outstanding Certificates relating to the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Indenture Trustee shall have
determined in good faith that the repayment of such funds or adequate indemnity
against such liability is not reasonably assured to it.
The Indenture Trustee will execute and the Owner Trustee will
file or cause to be filed such continuation statements with respect to
financing statements relating to the security interest created hereunder in the
Trust Indenture Estate as may be specified from time to time in written
instructions of the Holders of not less than 25% in aggregate principal amount
of Certificates (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may execute and file or cause to be filed any
financing statement which it from time to time deems appropriate.
(b) If any Event of Default shall have occurred and be
continuing and, after the latest date on which the Owner Trustee may cure such
Event of Default pursuant to Section 8.03 hereof, on request of the Holders of
not less than 25% in aggregate principal amount of Outstanding Certificates and
subject to indemnification, to the extent provided in Sections 7.08 and 9.03
and Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Article XI hereof) promptly take such
action as may be necessary duly to discharge all Liens on any part of the Trust
Indenture Estate which result from claims against it in its individual capacity
not related to the administration of the Trust Indenture Estate or any other
transaction pursuant to this Indenture or any document included in the Trust
Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee
for filing in accordance with Article 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such document,
instrument, financing or continuation statement as evidencing the fact that it
is properly prepared and presented, provided that the Indenture Trustee shall
promptly correct any error in any such document, instrument, financing or
continuation statement of which a Responsible Officer of the Indenture Trustee
has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject
to Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture, note, coupon,
security or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officer's
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to
prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture at the
request, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have offered to
the Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action
taken or omitted by it in good faith and believed by it to be authorized
or within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing to do so
by the Majority in Interest of Certificate Holders; provided that, if the
payment within a reasonable time to the Indenture Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the
terms of this Indenture, the Indenture Trustee may require reasonable
indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such examination shall be
paid by the Owner Trustee or, if paid by the Indenture Trustee or any
predecessor trustee, shall be repaid by the Owner Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the Indenture
Trustee shall not be responsible for any misconduct or negligence on the
part of any such agent or attorney appointed with due care by it
hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates, except the Indenture Trustee's certificates of
authentication. The Indenture Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Certificates. The
Indenture Trustee shall not be accountable for the use or application by the
Owner Trustee of any of the Certificates or of the proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold
Certificates; Collections, etc. The Indenture Trustee or any agent of the
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
the Indenture Trustee or such agent and may otherwise deal with the Owner
Trustee and receive, collect, hold and retain collections from the Owner
Trustee with the same rights it would have if it were not the Indenture Trustee
or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to
Sections 5.08 hereof and 14.04 hereof, all moneys received by the Indenture
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from
other funds except to the extent required by mandatory provisions of law.
Neither the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture
Trustee nor any agent thereof shall be under any liability for interest on any
moneys received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall deem
it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be specifically prescribed herein) may, in the
absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officer's Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on the
part of the Indenture Trustee, shall be full warrant to the Indenture Trustee
for any action taken, suffered or omitted by it under the provisions of this
Indenture upon the faith thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At
any time and from time to time any Airframe or Engine which has been subject to
an Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a Replacement Airframe or Replacement Engine, as
the case may be, shall be replaced in accordance with the provisions of this
Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such
release and specifically describing the Airframe and/or Engine(s) to be so
released.
(2) A certificate signed by a duly authorized officer of the
Lessee stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or
other applicable registration information) and manufacturer's
serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Airframe the Owner Trustee
will be the legal owner of and have good and marketable title to
such Replacement Airframe free and clear of all Liens except
Liens permitted under Section 6.01 of the Lease, that such
Replacement Airframe will on such date be in at least as good
operating condition and repair as required by the terms of the
Lease, and that such Replacement Airframe has been or,
substantially concurrently with such replacement, will be duly
registered in the name of the Owner Trustee under the
Transportation Code or under the law then applicable to the
registration of the Airframe subject to the Event of Loss and
that an airworthiness certificate has been duly issued under the
Transportation Code (or such other applicable law) with respect
to such Replacement Airframe and that such registration and
certificate is, or will be, in full force and effect, and that
the Lessee will have the full right and authority to use such
Replacement Airframe;
(iv) that the insurance required by Article 13 of the Lease is
in full force and effect with respect to such Replacement
Airframe and all premiums then due thereon have been paid in
full;
(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released
from this Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe
requested to be released (assuming such Airframe was in the
condition and repair required to be maintained under the Lease);
(vii) that no Event of Default has occurred and is continuing or
would result from the making and granting of the request for
release and the addition of a Replacement Airframe;
(viii) that the release of the Airframe subject to the Event of
Loss will not impair the security of the Indenture in
contravention of any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a
first priority security interest in favor of the Indenture
Trustee; and
(x) that each of the conditions specified in Section 11.03 of
the Lease with respect to such Replacement Airframe has been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee
will be the legal owner of such Replacement Engine free and clear
of all Liens except Liens permitted under Section 6.01 of the
Lease, and that such Replacement Engine will on such date be in
at least as good operating condition and repair as required by
the terms of the Lease;
(iv) that the value of the Replacement Engine as of the date of
such certificate is not less than the value of the Engine to be
released (assuming such Engine was in the condition and repair
required to be maintained under the Lease);
(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in
contravention of any of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine; and
(vii) that each of the conditions specified in Section 10.03,
11.03 or 11.04 of the Lease with respect to such Replacement
Engine has been satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's warranties,
if any, generally available with respect to such Replacement Airframe or
Replacement Engine, and an Indenture and Security Agreement Supplement
subjecting such Replacement Airframe or Replacement Engine to the Trust
Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this Indenture and
the Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the Lease,
the instruments subjecting such Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Indenture, as the case may be, have
been duly filed for recordation pursuant to the Transportation Code or any
other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary or
advisable in order to establish and perfect the title of the Owner Trustee
to and the Lien of this Indenture on such Replacement Airframe or
Replacement Engine and the Indenture Trustee would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to such
Replacement Airframe or Replacement Engine, provided, that such opinion
need not be to the effect specified in the foregoing clause to the extent
that the benefits of such Section 1110 would not have been, by reason of a
change in law or governmental interpretation thereof after the date
hereof, available to the Indenture Trustee with respect to the Aircraft
immediately prior to such substitution had such Event of Loss not
occurred.
Section 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a Replacement Airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the Lease,
the Owner Trustee and the Indenture Trustee agree for the benefit of the
Holders and the Lessee, subject to fulfillment of the conditions precedent and
compliance by the Lessee with its obligations set forth in Section 10.03 or
Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided no
Event of Default shall have occurred and be continuing, execute and deliver to
the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such Replacement Airframe or Replacement
Engine or Engines with the same force and effect as if such Replacement
Airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and
agrees to pay, and the Indenture Trustee shall be entitled to receive,
reasonable compensation and payment or reimbursement for its reasonable
advances, expenses and disbursements (including the reasonable compensation and
expenses and disbursements of its counsel, agents and other persons not
regularly in its employ) in connection with its services rendered hereunder or
in any way relating to or arising out of the administration of the Trust
Indenture Estate and shall have a priority claim on the Trust Indenture Estate
for the payment of such compensation, advances, expenses and disbursements to
the extent that such compensation, advances, expenses and disbursements shall
not be paid by the Lessee, and shall have the right to use or apply any moneys
held by it hereunder in the Trust Indenture Estate toward such payments;
provided that, so long as the Lease is in effect, the Indenture Trustee shall
not make any claim for payment under this Section 9.11 against the Owner
Trustee without first making demand on the Lessee for payment of such claim.
The Indenture Trustee agrees that it shall have no right against any Holder,
SSB or the Owner Participant for any fee as compensation for its services as
trustee under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote
or consent to any direction, waiver or other action of such Holders under
Section7.10 or 7.11 hereof, the Lessee may set a record date for such vote or
consent by specifying such record date in an Officer's Certificate delivered to
the Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding
of Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of
any instrument by a Holder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may be prescribed by the
Indenture Trustee. The holding of Certificates shall be proved by the Register
or by a certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner Trustee,
the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee,
the Paying Agent, if any, the Registrar and the Lessee may deem and treat the
Person in whose name such Certificate shall be registered upon the Register as
the absolute owner of such Certificate (whether or not such Certificate shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such
Certificate and for all other purposes; and neither the Owner Trustee nor the
Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee)
nor the Paying Agent, if any, nor the Registrar nor the Lessee shall be
affected by any notice to the contrary. All such payments so made to any such
person, or upon his order, shall be valid, and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Certificate.
Section 10.04. Certificates Owned by Owner Trustee and the
Lessee Deemed Not Outstanding. In determining whether the Holders of the
requisite aggregate principal amount of Certificates have concurred in any
direction, consent or waiver under this Indenture, Certificates which are owned
by the Owner Trustee, the Owner Participant, SSB, the Lessee or by any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant or SSB
shall such Certificates be so disregarded; and provided further that if all
Certificates which would be deemed Outstanding in the absence of the foregoing
provision are owned by the Owner Trustee or the Owner Participant or by any
Affiliate thereof, then such Certificates shall be deemed Outstanding for the
purpose of any such determination. Certificates so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not the Owner Trustee, the
Owner Participant, SSB or the Lessee or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Owner Trustee, the Owner Participant, SSB or the Lessee. In case of a
dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Indenture Trustee in accordance with such
advice, unless the Lessee, the Owner Trustee, SSB, or the Owner Participant are
actually named in the Register. Upon request of the Indenture Trustee, the
Owner Trustee, the Owner Participant, SSB and the Lessee shall furnish to the
Indenture Trustee promptly an Officer's Certificate listing and identifying all
Certificates, if any, known by the Owner Trustee, the Owner Participant, SSB or
the Lessee to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 9.02 and 9.03 hereof, the
Indenture Trustee shall be entitled to accept such Officer's Certificate as
conclusive evidence of the facts set forth therein and of the fact that all
Certificates not listed therein are outstanding for the purpose of any such
determination.
Section 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Department and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Certificate. Except as aforesaid, any such action taken by the Holder shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Certificate and of any Certificates issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Certificate or otherwise. Any action taken by the Holders of
the percentage in aggregate principal amount of the Certificates specified in
this Indenture in connection with such action shall be conclusively binding
upon the Owner Trustee, the Indenture Trustee and the Holders of all the
Certificates.
Section 10.06. ERISA. Any Person, other than the Subordination
Agent and the Pass Through Trustee, who is acquiring the Certificates will be
deemed to represent and warrant that (i) no assets of an employee benefit plan
subject to Title I of ERISA or an individual retirement account or plan subject
to Section 4975 of the Code, or any trust established under any such plan or
account, have been used to acquire or hold any of the Certificates, or (ii)
that one or more administrative or statutory exemptions from the prohibited
transaction rules under Section 406 of ERISA and Section 4975 of the Code
applies to its purchase and holding of the Certificates such that its purchase
and holding of the Certificates will not result in a non-exempt prohibited
transaction under Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its services
under this Indenture), claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Indenture Trustee (whether
or not also agreed to be indemnified against by any other person under any
other document) in any way relating to or arising out of this Indenture, or any
other Indenture Documents or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, nonacceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent and other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration
of the Trust Indenture Estate or the action or inaction of the Indenture
Trustee hereunder, except only (a) in the case of willful misconduct or gross
negligence of the Indenture Trustee in the performance of its duties hereunder,
(b) as may result from the inaccuracy of any representation or warranty of the
Indenture Trustee in the Participation Agreement, (c) as otherwise provided in
Section 9.02(c) hereof or (d) as otherwise excluded by the terms of Article 8
or Article 9 of the Participation Agreement from the Lessee's indemnity to the
Indenture Trustee under said Articles; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI
for any claim or expense indemnified by the Lessee under the Participation
Agreement without first making demand on the Lessee for payment of such claim
or expense. The Indenture Trustee shall be entitled to indemnification, from
the Trust Indenture Estate, for any liability, obligation, loss, damage,
penalty, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Article XI to the extent not reimbursed by the Lessee or
others, but without releasing any of them from their respective agreements of
reimbursement; and to secure the same the Indenture Trustee shall have a prior
Lien on the Trust Indenture Estate. The indemnities contained in this Article
XI shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee. Upon payment in full by the Owner Trustee
of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long
as no Indenture Event of Default shall have occurred and be continuing, be
subrogated to the rights of the Indenture Trustee, if any, in respect of the
matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case
of any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Owner Trustee pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to the Indenture Trustee.
Section 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each Holder,
such resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, the Majority in Interest of the
Certificate Holders or the Owner Trustee, with the consent of the Lessee and
the Majority in Interest of the Certificate Holders may at any time remove the
Indenture Trustee without cause by an instrument in writing delivered to the
Lessee, the Owner Trustee, the Owner Participant, and the Indenture Trustee,
and the Indenture Trustee shall promptly notify each Holder thereof of such
action in writing, such removal to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, the Majority in Interest of the
Certificate Holders, or the Owner Trustee, with the consent of the Lessee and
the Majority in Interest of the Certificate Holders, may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such
notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the
Lessee, the Owner Participant, or any Holder may apply to any court of
competent jurisdiction to appoint a successor Indenture Trustee to act until
such time, if any, as a successor shall have been appointed as provided above.
The successor Indenture Trustee so appointed by such court shall immediately
and without further act be superseded by any successor Indenture Trustee
appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Owner Trustee or by any such
Holder; or
(ii) the Indenture Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of
the Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer of the Owner Trustee, one copy of which
instrument shall be delivered to the Indenture Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section7.13 hereof,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as provided above within one year from
the date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which shall
be (i)(x) a bank or trust company organized and doing business under the laws
of the United States of America or any state or the District of Columbia having
a combined capital and surplus of at least $100,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or
indirect parent thereof having a combined capital and surplus of at least
$100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to supervision of
examination by Federal, state or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Indenture Trustee shall cease to be eligible in accordance with the provisions
of this Section, the Indenture Trustee shall resign immediately in the manner
and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 12.02 hereof shall
execute and deliver to the Owner Trustee, the Lessee, and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Owner Trustee or of
the successor trustee, upon payment of its charges then unpaid, the trustee
ceasing to act shall, subject to Section 14.04 hereof, pay over to the
successor trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all such
rights, powers, duties and obligations. Upon request of any such successor
trustee, the Owner Trustee shall execute any and all instruments in writing for
more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
trustee to secure any amounts then due it pursuant to the provisions of Article
XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided
in this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear in
the Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous
with the resignation, then the notice called for by the preceding sentence may
be combined with the notice called for by Section 12.02 hereof.
Section 12.05. Merger, Conversion, Consolidation or Succession
to Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Indenture Trustee shall be a party, or any corporation succeeding to the
corporate trust business of the Indenture Trustee, shall be the successor to
the Indenture Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either in
the name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Certificates or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Certificates in the name of any predecessor Indenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. Appointment of Separate Trustees. (a) At any
time or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed
by it, may appoint one or more individuals or corporations to act as a separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of the Trust Indenture Estate, to the full extent
that local law makes it necessary for such separate trustee or separate
trustees or co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee,
it, he or they shall be vested with such title to the Trust Indenture Estate or
any part thereof, and with such rights, powers, duties and obligations, as
shall be specified in the instrument of appointment, and such rights, powers,
duties and obligations shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee, or the Indenture Trustee and such separate
trustee or separate trustees or co-trustee jointly with the Indenture Trustee
subject to all the terms of this Indenture, except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or
his behalf and in its or his name. In case any such separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, the
title to the Trust Indenture Estate and all assets, property, rights, powers,
duties and obligations and duties of such separate trustee or co-trustee shall,
so far as permitted by law, vest in and be exercised by the Indenture Trustee,
without the appointment of a successor to such separate trustee or co-trustee
unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit
of the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder
shall, to the extent permitted by law, be appointed and act and the Indenture
Trustee shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional
trustee or trustees and separate trustee or trustees jointly except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional trustee or trustees or separate trustee or
trustees;
(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or with
the consent of, the Indenture Trustee; and
(iv) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06,
the powers of any additional trustee or separate trustee shall not exceed those
of the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of
Holders. The Owner Trustee (when authorized by the Owner Participant) and the
Indenture Trustee, without consent of the Holders, may enter into an indenture
or indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property
or assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the
Owner Trustee or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of the
Owner Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to
make the occurrence, or the occurrence and continuance, of a default in
any such additional covenants, restrictions, conditions or provisions an
Indenture Event of Default permitting the enforcement of all or any of the
several remedies provided herein; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
indenture may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such an
Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the
right of not less than the Majority in Interest of Certificate Holders to
waive such an Indenture Event of Default;
(d) to surrender any right or power conferred herein upon the
Owner Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in
any supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any
supplemental indenture as the Owner Trustee may deem necessary or
desirable and which shall not adversely affect the interests of the
Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject Replacement Airframe
or Replacement Engines to the Lien of this Indenture in accordance with
the provisions hereof or with the Lease or to release from the Lien of
this Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting Replacement
Airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of
Certificates in coupon form (including Certificates registrable as to
principal only) and to provide for exchangeability of such Certificates
with Certificates issued hereunder in fully registered form, and to make
all appropriate changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long
as such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be contained therein and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Indenture Trustee shall not be obligated to enter into any
such supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Any such supplemental indenture may be executed without the
consent of the Holders of Outstanding Certificates, notwithstanding any of the
provisions of Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the Holders; provided, however, that, without the
consent of each Holder and each Liquidity Provider, no such amendment of or
supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Certificate or reduce the interest payable on any Certificate (except that
only the consent of the Holder shall be required for any decrease in any
amounts of or the rate of interest payable on such Certificate or any extension
for the time of payment of any amount payable under such Certificate), or alter
or modify the provisions of Article V hereof with respect to the order of
priorities in which distributions thereunder shall be made as among Holders of
different Series of Certificates or as between the Holder and the Owner Trustee
or the Owner Participant or with respect to the amount or time of payment of
any such distribution, or alter or modify the circumstances under which a
Make-Whole Premium shall be payable, or alter the currency in which any amount
payable under any Certificate is to be paid, or impair the right of any Holder
to commence legal proceedings to enforce a right to receive payment hereunder,
(c) reduce, modify or amend any indemnities in favor of any Holder or in favor
of or to be paid by the Owner Participant (except as consented to by each
Person adversely affected thereby), or (d) create or permit the creation of any
Lien on the Trust Indenture Estate or any part thereof prior to or pari passu
with the Lien of this Indenture, except as expressly permitted herein, or
deprive any Holder of the benefit of the Lien of this Indenture on the Trust
Indenture Estate, except as provided in Section 7.02 hereof or in connection
with the exercise of remedies under Article VII. This Section 13.02 shall not
apply to any indenture or indentures supplemental hereto permitted by, and
complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the
Owner Participant) and upon the filing with the Indenture Trustee of evidence
of the consent of Holders and other documents, if any, required by Section
10.01, the Indenture Trustee shall join with the Owner Trustee and the Lessee
in the execution of such supplemental indenture unless such supplemental
indenture affects the Indenture Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Indenture Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the provisions
of this Section, the Indenture Trustee shall mail a notice thereof by
first-class mail to the Holders at their addresses as they shall appear on the
registry books of the Registrar, setting forth in general terms the substance
of such supplemental indenture. Any failure of the Indenture Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
Section 13.03. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officer's Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
Section 13.05. Notation on Certificates in Respect of
Supplemental Indentures. Certificates authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Indenture Trustee as to any
matter provided for by such supplemental indenture. If the Owner Trustee or
the Indenture Trustee shall so determine, new Certificates so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Outstanding Certificates.
Section 13.06. No Request Necessary for Lease Supplement or
Indenture and Security Agreement Supplement. Notwithstanding anything
contained in Section 13.02 hereof, no written request or consent of the
Indenture Trustee, any Holder or the Owner Participant pursuant to Section
13.02 hereof shall be required to enable the Owner Trustee to enter into any
supplement to the Lease with the Lessee pursuant to the terms of the Lease to
subject a Replacement Airframe or Replacement Engine thereto or to execute and
deliver an Indenture and Security Agreement Supplement pursuant to the terms
hereof.
Section 13.07. Notices to Liquidity Providers. Any request made
to any Holder for consent to any amendment, supplement or waiver pursuant to
Section 7.11, 8.01 or this Article XIII shall be promptly furnished by the
Indenture Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture;
Termination of Indenture. If at any time after (a) the Owner Trustee shall
have paid or caused to be paid the principal of and interest on all the
Certificates outstanding hereunder, as and when the same shall have become due
and payable, or (b) the Owner Trustee shall have delivered to the Indenture
Trustee for cancellation all Certificates theretofore authenticated (other than
any Certificates which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.07 hereof) or (c) (i)
all such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for prepayment within one
year under arrangements satisfactory to the Indenture Trustee for the giving of
notice of prepayment by the Indenture Trustee in the name and at the expense of
the Owner Trustee, and (ii) the Owner Trustee shall have irrevocably deposited
or caused to be deposited with the Indenture Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Indenture Trustee or any paying
agent to the Owner Trustee in accordance with Section 14.04 hereof) or
Government obligations maturing as to principal and interest in such amounts
and at such times as will insure the availability of cash sufficient to pay at
maturity all such Certificates not theretofore delivered to the Indenture
Trustee for cancellation, including principal and interest due or to become due
to such date of maturity as the case may be, and if, in any such case, the
Owner Trustee shall also pay or cause to be paid all other sums then payable
hereunder by the Owner Trustee, then this Indenture shall cease to be of
further effect (except as to (A) rights of registration of transfer and
exchange, and the Owner Trustee's right of optional prepayment pursuant to
Section 6.02(a)(ii) hereof, (B) substitution of mutilated, defaced, destroyed,
lost or stolen Certificates, (C) rights of Holders to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), (D) the rights, obligations, indemnities
and immunities of the Indenture Trustee hereunder and (E) the rights of the
Holders as beneficiaries hereof with respect to the property so deposited with
the Indenture Trustee payable to all or any of them), and the Indenture
Trustee, on demand of the Owner Trustee accompanied by an Officer's Certificate
and an Opinion of Counsel (covering such matters reasonably requested by, and
in form and substance reasonably satisfactory to, the Indenture Trustee) and at
the cost and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs
or expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the Certificates.
Upon (or at any time after) payment in full to the Indenture
Trustee, as trust funds, of the principal of and interest on and Make-Whole
Premium, if any, and all other amounts due hereunder and under all Certificates
and provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and releasing
the Indenture Documents from the assignment thereof hereunder, and the
Indenture Trustee shall execute and deliver such instrument as aforesaid and,
at the Owner Trustee's expense, will execute and deliver such other instruments
or documents as may be reasonably requested by the Owner Trustee to give effect
to such release; provided, however, that this Indenture and the trusts created
hereby shall terminate earlier and this Indenture shall be of no further force
or effect upon any sale or other final disposition by the Indenture Trustee of
all property forming a part of the Trust Indenture Estate and the final
distribution by the Indenture Trustee of all moneys or other property or
proceeds constituting part of the Trust Indenture Estate in accordance with the
terms hereof. Except as aforesaid otherwise provided, this Indenture and the
trusts created hereby shall continue in full force and effect in accordance
with the terms hereof.
Section 14.02. Application by Indenture Trustee of Funds
Deposited for Payment of Certificates. Subject to Section 14.04 hereof, all
moneys deposited with the Indenture Trustee pursuant to Section 14.01 hereof
shall be held in trust and applied by it to the prompt payment, either directly
or through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon
the satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
Section 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become due
and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the Owner
Trustee (or, if the Trust Agreement shall no longer be in effect, to the Owner
Participant) by the Indenture Trustee or such Paying Agent and the Holder of
such Certificate, as a general unsecured creditor, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of SSB (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of SSB (or its
permitted successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in
Holders. No Holder shall have legal title to any part of the Trust Indenture
Estate. No transfer, by operation of law or otherwise, of any Certificate or
other right, title and interest of any Holder in and to the Trust Indenture
Estate or hereunder shall operate to terminate this Indenture or entitle such
Holder or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
Section 15.03. Sale of Trust Indenture Estate by Indenture
Trustee is Binding. Any sale or other conveyance of all or any part of the
Trust Indenture Estate by the Indenture Trustee made pursuant to the terms of
this Indenture or of the Lease shall bind the Lessee, the Owner Trustee, the
Holders and the Owner Participant and shall be effective to transfer or convey
all right, title and interest of the Indenture Trustee, the Owner Trustee, the
Owner Participant and such Holders therein and thereto. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee.
Section 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Holders and Liquidity Providers. Nothing in this
Indenture, whether express or implied, shall be construed to give to any person
other than SSB, the Owner Trustee, the Lessee, the Indenture Trustee, as
trustee and in its individual capacity, the Owner Participant, each Liquidity
Provider and the Holders any legal or equitable right, remedy or claim under or
in respect of this Indenture.
Section 15.05. No Action Contrary to the Lessee's Rights Under
the Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet possession
and enjoyment of the Aircraft by the Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy, and (a) if to the
Owner Trustee, addressed to it at its office at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni Administration,
facsimile (860) 244-1889 with a copy to State Street Bank and Trust Company,
Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department, telephone (617) 664-5526, facsimile (617) 664-5371,
(b) if personally delivered to the Indenture Trustee, addressed to it at its
office at 79 South Main Street, Salt Lake City, Utah 84111, Attention:
Corporate Trust Department, telephone: (801) 246-5630, facsimile: (801)246-5053
or (c) if to the Owner Participant, a Liquidity Provider or the Lessee,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party if any, set forth in
Section 14.01 of the Participation Agreement. Any party hereto may change the
address to which notices to such party will be sent by giving notice of such
change to the other parties to this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at such Holder's last address as it appears in the Register. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Owner
Trustee and Holders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving
of such notice.
Section 15.07. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officer's Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and that
the proposed action is in conformity with the requirements of this Indenture,
and (b) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
Any certificate, statement or opinion of an officer of SSB may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters information with respect to which is in the
possession of the Lessee or SSB, upon the certificate, statement or opinion of
or representations by an officer or officers of the Lessee or SSB, as the case
may be, unless such counsel knows that the certificate, statement or opinion or
representations with respect to the matters upon which his certificate,
statement or opinion may be based as aforesaid are erroneous, or in the
exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee
or SSB or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the case
may be, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
Section 15.08. Severability. Any provision of this Indenture
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
Section 15.10. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
each of the parties hereto and the successors and permitted assigns of each,
all as herein provided. Any request, notice, direction, consent, waiver or
other instrument or action by any Holder shall bind the successors and assigns
of such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent permitted
hereby and thereby.
Section 15.11. Headings. The headings of the various Articles
and Sections herein and in the table of contents hereto are for the convenience
of reference only and shall not define or limit any of the terms or provisions
hereof.
Section 15.12. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any purpose
whatsoever, whether related to any of the transactions contemplated hereby or
otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the date first written above by their respective
officers thereunto duly authorized and acknowledge that this Indenture has been
made and delivered in the City of New York, and this Indenture shall be
effective only upon such execution and delivery.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as specifically set forth herein
but solely as Owner Trustee
By_____________________________________________
Name: Paul D. Allen
Title: Vice President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By_____________________________________________
Name: Greg A. Hawley
Title: Vice President
Exhibit A
to
Trust Indenture and Security Agreement
--------------------------------------
Indenture and Security Agreement Supplement No. ___
Indenture and Security Agreement Supplement No. ___ (Federal
Express Corporation Trust No. N677FE) dated ________, ____, of STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as owner trustee (herein
called the "Owner Trustee") under the Trust Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Trust Agreement") between State Street Bank
and Trust Company of Connecticut, National Association and the Owner
Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and
delivery of this Indenture and Security Agreement Supplement which shall
particularly describe the Aircraft and any Replacement Airframe or Replacement
Engine included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Indenture") between the Owner Trustee and
First Security Bank, National Association (herein called the "Indenture
Trustee") provides for the execution and delivery of an Indenture and Security
Agreement Supplement substantially in the form of this Indenture and Security
Agreement Supplement No. __, which Supplement shall particularly describe the
Aircraft included in the Trust Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
(1)WHEREAS, the Indenture relates to the Aircraft and the Engines
described in the following paragraph and a counterpart of the Indenture is
attached to and made a part of this Indenture and Security Agreement Supplement
No. 1, and this Indenture and Security Agreement Supplement No. 1, together
with such attachment, is being filed for recordation on or promptly after the
date of this Supplement No. 1 with the Federal Aviation Administration as one
document.
- --------
1 This recital is to be included only in the first Indenture Supplement.
(2)WHEREAS, the Indenture and Indenture and Security Agreement
Supplement No. ___ dated _________________, ______ (the Indenture being
attached to and made a part of such Indenture and Security Agreement Supplement
and filed therewith) have been duly recorded pursuant to Subtitle VII of Title
49 of the United States Code, on ____________, _____, as one document and have
been assigned Conveyance No. _________.
- --------
2 This recital is not to be included in the first Indenture Supplement.
NOW, THEREFORE, this Supplement witnesseth, that, to secure the
prompt payment of the principal of and Make-Whole Premium, if any, and interest
on, and all other amounts due with respect to, all Outstanding Certificates
under the Indenture and all other amounts due hereunder and the performance and
observance by the Owner Trustee of all the agreements, covenants and provisions
for the benefit of the Holders contained in the Indenture, in the Lease, in the
Participation Agreement and the Certificates, and the prompt payment of any and
all amounts from time to time owing under the Participation Agreement by the
Owner Trustee, the Owner Participant or the Lessee to the Holders and for the
uses and purposes and subject to the terms and provisions of the Indenture and
the Certificates, and in consideration of the premises and of the covenants
contained in the Indenture, and of the purchase of the Certificates by the
Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture
Trustee at or before the delivery of the Indenture, the receipt of which is
hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged, granted a security interest in, and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge, grant a security interest in, and confirm, unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
security and benefit of the Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth
in the Indenture, a first priority security interest in and mortgage lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- ------------ ----- ------------ --------------
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
- ------------ ----- --------------
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above, whether
the same are now owned by the Owner Trustee or shall hereafter be acquired by
it.
As further security for the obligations referred to above and
secured by the Indenture and hereby, the Owner Trustee has granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge
and confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth
in the Indenture, all of the estate, right, title and interest of the Owner
Trustee in, to and under the Lease Supplement (other than Excepted Payments, if
any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto
the Indenture Trustee, its successors and assigns, for the benefit and security
of the Holders for the uses and purposes and subject to the terms and
provisions set forth in the Indenture.
This Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and
confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement
to be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as specifically set forth herein
but solely as Owner Trustee
By__________________________________________
Name: Paul D. Allen
Title: Vice President
Exhibit B
to
Trust Indenture and Security Agreement
--------------------------------------
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N677FE)
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N677FE)
dated as of June 15, 1998,
as amended and restated as of August 1, 1998
SERIES ___
Interest Rate Maturity
- ------------- --------
State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity but
solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement (Federal Express Corporation Trust No.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, between the Owner Participant named therein and State Street Bank and
Trust Company of Connecticut, National Association (herein as such Trust
Agreement may be amended or supplemented from time to time called the "Trust
Agreement"), hereby promises to pay to FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Subordination Agent, or its registered assigns, the principal
sum of ________________ _______________ Dollars, payable as set forth below
for the Maturity specified above, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest on the principal outstanding from
time to time, semiannually on each January 15 and July 15, on said principal
sum in like coin or currency at the rate per annum set forth above from the
January 15 or the July 15, as the case may be, next preceding the date of this
Certificate to which interest on the Certificates has been paid or duly
provided for, unless the date hereof is a date to which interest on the
Certificates has been paid or duly provided for, in which case from the date of
this Certificate. Notwithstanding the foregoing, if the date hereof is after
any January 15 or July 15 and before the following January 15 or July 15, as
the case may be, this Certificate shall bear interest from such January 15 or
July 15; provided that, if the Owner Trustee shall default in the payment of
interest due on such January 15 or July 15, then this Certificate shall bear
interest from the next preceding January 15 or July 15 to which interest on
this Certificate has been paid or duly provided for. The interest so payable
on any January 15 or July 15 will, except as otherwise provided in the
Indenture referred to below, be paid to the person in whose name this
Certificate is registered at the close of business on the January 15 or July 15
preceding such January 15 or July 15, whether or not such day is a Business
Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of First Security Bank, National Association
(the "Indenture Trustee") maintained for such purpose; provided that, at the
option of the Indenture Trustee or its Paying Agent, interest may be paid by
mailing a check therefor payable to or upon the written order of the registered
holder entitled thereto at his last address as it appears on the Register. If
any amount payable under this Certificate, or under the Indenture, falls due on
a day that is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, without (provided that payment is made on such next
succeeding Business Day) additional interest thereon for the period of such
extension.
State Street Bank and Trust Company of Connecticut, National
Association and First Security Bank, National Association are not acting
individually hereunder, but solely as Owner Trustee and Indenture Trustee.
Any Person, other than the Subordination Agent, who is acquiring
the Certificates will be deemed to represent and warrant that (i) no assets of
an employee benefit plan subject to Title I of ERISA or an individual
retirement account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account, have been used to acquire or hold
any of the Certificates, or (ii) that one or more administrative or statutory
exemptions from the prohibited transaction rules under Section 406 of ERISA and
Section 4975 of the Code applies to its purchase and holding of the
Certificates such that its purchase and holding of the Certificates will not
result in a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code.
This Certificate is one of a duly authorized issue of
Certificates issued and to be issued under the Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N677FE) dated as of June 15,
1998, as amended and restated as of August 1, 1998 (herein as amended,
supplemented or modified from time to time called the "Indenture") between the
Owner Trustee and the Indenture Trustee.
Reference is made to the Indenture and all supplements and
amendments thereto (a copy of which is on file with the Indenture Trustee at
its principal corporate trust office) for a more complete statement of the
terms and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of this
Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as set
forth on Schedule I attached hereto. The Certificates are subject to
redemption in part, pro rata (based on the face amount thereof), in each case
through mandatory sinking fund redemptions providing for the redemption on the
Sinking Fund Redemption Dates of the aggregate principal amounts set forth on
Schedule I attached hereto, together with interest accrued thereon to the
applicable Sinking Fund Redemption Date, but without Make-Whole Premium.
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder or
under the Indenture shall be made only from the income and proceeds from the
Lessor's Estate to the extent included in the Trust Indenture Estate and only
to the extent that the Owner Trustee shall have sufficient income or proceeds
from the Lessor's Estate to the extent included in the Trust Indenture Estate
to enable the Indenture Trustee to make such distributions in accordance with
the terms of the Indenture; provided that under the Lease, the Lessee is
obligated to pay or cause to be paid, to the extent such payments are not
required to be made from the assets subject to the Lien of this Indenture or
the income and proceeds received by the Indenture Trustee therefrom, any net
loss arising from the investment of funds held by the Indenture Trustee which
but for an Event of Default would be payable to Lessee, and each Holder hereof,
by its acceptance of this Certificate, agrees that it will (except as
aforesaid) look solely to the income and proceeds from the Trust Indenture
Estate to the extent available for distribution to the Holder hereof as
provided above and that neither the Owner Participant, the Owner Trustee, SSB
nor the Indenture Trustee is personally liable to the Holder hereof for any
amounts payable or any liability under this Certificate or under the Indenture,
except as expressly provided in the Indenture, in the case of SSB, the Owner
Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the circumstances
and at the prices determined as set forth in the Indenture.
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the Lessee
shall assume all of the obligations of the Owner Trustee hereunder, under the
Certificates and all other Operative Agreements, the Owner Participant and the
Owner Trustee shall (except for prior acts) be released and discharged from any
further obligations hereunder and under the Certificates and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
If an Indenture Event of Default under the Indenture shall occur
and be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its consequences
may be waived the Majority in Interest of Holders. Any such consent or waiver
shall be conclusive and binding upon the Holder of this Certificate and upon
all future Holders and owners of this Certificate and any Certificate that may
be issued in exchange or substitution therefor, whether or not any notation
thereof is made upon this Certificate or such other Certificates. Moreover, if,
and only if, an Event of Default shall occur, the Indenture Trustee may declare
the Lease to be in default, and may, to the exclusion of the Owner Trustee,
exercise one or more of the remedies of the Owner Trustee provided in the
Lease.
The Owner Trustee or the Owner Participant may cure a default by
the Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing
for more than 180 days or the Certificates shall have been accelerated or (B)
an Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of
all the Outstanding Certificates by notifying the Indenture
Trustee of such election and depositing the sum of amounts
contemplated by paragraph "first" under Section 5.03 of the
Indenture and the aggregate Prepayment Price of all such
Certificates with the Indenture Trustee for distribution to the
Holders; or
(2) purchase all of the Outstanding Certificates by
paying to the Indenture Trustee an amount equal to the aggregate
unpaid principal amount of all Outstanding Certificates, plus
accrued interest on such amount to the date of purchase and any
Make-Whole Premium applicable to each Outstanding Certificate, if
such purchase occurs prior to the Premium Termination Date for
such Outstanding Certificate (in the case of a purchase pursuant
to clause (ii) of the first sentence of Section 8.02(a) of the
Indenture) plus all other sums due any Holder or the Indenture
Trustee under the Indenture, the Participation Agreement or the
Lease.
The right of the Holder hereof to institute an action for any
remedy under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit for
the enforcement of any such payment, shall not be impaired or affected without
the consent of such Holder.
The Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof. So
long as any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the Certificates
may be presented for registration of transfer and for exchange as provided in
the Indenture. As provided in the Indenture and subject to certain limitations
therein, this Certificate is transferable, and upon surrender of this
Certificate for registration of transfer at the principal corporate trust
office of the Indenture Trustee, or at the office or agency maintained for such
purposes, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Indenture Trustee duly
executed by, the Holder or his attorney duly authorized in writing, one or more
new Certificates of the same Series and Maturity and interest rate and of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Series and Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee may deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
The indebtedness evidenced by this Certificate is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right
of payment to the prior payment in full of the Secured Obligations (as defined
in the Indenture) in respect of [Series A Certificate](1), [Series A and Series
B Certificates](2) and this Certificate is issued subject to such provisions.
The Holder of this Certificate, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Indenture Trustee
on such Holder's behalf to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Indenture and (c) appoints
the Indenture Trustee such Holder's attorney-in-fact for such purpose.*
- --------
1 To be inserted in the case of a Series B Certificate.
2 To be inserted in the case of a Series C Certificate.
* To be inserted for each Certificate other than any Series A Certificate.
The Owner Trustee shall have the right, on the Delivery Date to
modify Schedule I attached hereto subject to the terms and conditions set forth
in Section 2.03(b) of the Original Participation Agreement. To give effect to
the foregoing, Schedule I attached hereto and Schedule I to the Indenture shall
be amended accordingly. The Indenture Trustee shall deliver such amendments to
the Subordination Agent on behalf of the Pass Through Trustee for each of the
Pass Through Trusts. To the extent that such amendment of the Indenture occurs
later than the Delivery Date, the Indenture, as amended, shall, if required, be
duly filed for recordation with the Aeronautics Authority.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment
Trust Certificate (Federal Express Corporation Trust No. N677FE) to be duly
executed in its corporate name by its officer thereunto duly authorized.
Dated: ________, ____ STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By _____________________________________________
Name: Paul D. Allen
Title: Vice President
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE) referred to in the within mentioned Indenture.
Dated: ________, ____ FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By ____________________________________
Name: Greg A. Hawley
Title: Vice President
SCHEDULE I
TO
CERTIFICATE
Principal Amount
----------------
Series [_]
Certificates with a
Sinking Fund Maturity of
Redemption Date [_______________]
---------------
SCHEDULE I
SCHEDULE OF PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Principal Amount
----------------
Series A Series B Series C
Certificates with a Certificates with a Certificates with a
Sinking Fund Maturity of Maturity of Maturity of
Redemption Date January 15, 2021 January 15, 2019 January 15, 2016
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
January 15, 1999 $ 135,540 $ 1,829,784 $ 1,056,555
January 15, 2000 999,787 0 0
January 15, 2001 1,013,096 56,249 0
January 15, 2002 1,013,096 379,911 0
January 15, 2003 1,013,096 379,911 963,553
January 15, 2004 1,013,096 379,911 1,265,450
January 15, 2005 1,013,096 379,911 1,073,782
January 15, 2006 1,013,096 379,911 376,055
January 15, 2007 1,013,096 379,911 500,570
January 15, 2008 1,013,096 379,911 343,976
January 15, 2009 1,013,096 379,911 0
January 15, 2010 1,013,096 379,911 0
January 15, 2011 1,013,096 379,911 54,805
January 15, 2012 1,013,096 379,911 116,185
January 15, 2013 1,013,096 379,911 439,381
January 15, 2014 1,013,096 379,911 2,320,582
January 15, 2015 1,013,096 379,911 2,745,995
January 15, 2016 1,013,096 379,911 2,858,111
January 15, 2017 1,013,096 1,232,353 0
January 15, 2018 1,013,096 3,813,485 0
January 15, 2019 4,066,120 779,464 0
January 15, 2020 5,502,623 0 0
January 15, 2021 3,939,202 0 0
</TABLE>
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Exhibit 2.
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial Owner Participant
CESSNA FINANCE CORPORATION,
Owner Participant
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Indenture Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Pass Through Trustee
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Subordination Agent
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Initial Recitals............................................................ 1
ARTICLE 1
DEFINITIONS............................................................ 3
ARTICLE 2
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved].............................................. 3
Section 2.02. [Reserved].............................................. 3
Section 2.03. Amendments on Delivery Date............................. 3
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date........................ 5
Section 3.02. Commitments to Participate in Purchase Price............ 5
Section 3.03. Owner Participant's Instructions to Owner Trustee....... 8
Section 3.04. Transaction Costs....................................... 8
Section 3.05. Postponement of Delivery Date........................... 9
Section 3.06. Closing................................................. 10
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent.................................... 10
Section 4.02. Opinion of Special Aviation Counsel Upon Registration... 22
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............ 22
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties................. 23
Section 6.02. Offering by Lessee...................................... 29
Section 6.03. Certain Covenants of Lessee............................. 29
Section 6.04. Survival of Representations and Warranties. ............ 37
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate............................................. 37
Section 7.02. Citizenship............................................. 37
Section 7.03. Representations, Warranties and Covenants of Owner
Participant........................................ 39
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee...................................... 41
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee.................................. 44
Section 7.06. Indenture Trustee's Notice of Default................... 46
Section 7.07. Releases from Indenture................................. 46
Section 7.08. Covenant of Quiet Enjoyment............................. 46
Section 7.09. Pass Through Trustee's Representations and Warranties... 46
Section 7.10. Survival of Representations, Warranties and Covenants... 47
Section 7.11. Lessee's Assumption of the Certificates. ............... 47
Section 7.12. Indebtedness of Owner Trustee........................... 49
Section 7.13. Compliance with Trust Agreement, Etc. .................. 49
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. ........................................ 50
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes........................ 52
Section 8.02. After-Tax Basis......................................... 56
Section 8.03. Time of Payment......................................... 57
Section 8.04. Contests................................................ 57
Section 8.05. Refunds................................................. 59
Section 8.06. Lessee's Reports........................................ 60
Section 8.07. Survival of Obligations................................. 60
Section 8.08. Payment of Taxes........................................ 60
Section 8.09. Reimbursements by Indemnitees Generally................. 61
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally............................................... 61
Section 9.02. After-Tax Basis......................................... 65
Section 9.03. Subrogation............................................. 66
Section 9.04. Notice and Payment...................................... 66
Section 9.05. Refunds................................................. 66
Section 9.06. Defense of Claims. ..................................... 66
Section 9.07. Survival of Obligations................................. 67
Section 9.08. Effect of Other Indemnities............................. 67
Section 9.09. Interest................................................ 68
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs...................... 68
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee................. 71
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant................... 72
Section 12.02. Interest of Holders of Certificates.................... 72
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents................... 73
Section 13.02. Further Assurances..................................... 73
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.................................... 73
Section 13.04. No Retroactive Application. ........................... 73
ARTICLE 14
NOTICES
Section 14.01. Notices................................................ 74
ARTICLE 15
REFINANCING
Section 15.01. Refinancing. .......................................... 75
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved]............................................. 78
Section 17.02. Collateral Account..................................... 78
Section 17.03. Counterparts........................................... 80
Section 17.04. No Oral Modifications.................................. 80
Section 17.05. Captions............................................... 80
Section 17.06. Successors and Assigns. ............................... 80
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee.......................... 80
Section 17.08. Severability........................................... 81
Section 17.09. Public Release of Information.......................... 81
Section 17.10. Certain Limitations on Reorganization.................. 81
Section 17.11. GOVERNING LAW.......................................... 82
Section 17.12. Section 1110 Compliance................................ 82
Section 17.13. Reliance of Liquidity Providers. ...................... 82
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality........................................ 82
SCHEDULE I Owner Participant's Commitment; Debt Portion
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(5) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(7) Opinion of Manufacturer's and AVSA's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement, AVSA Consent and Agreement
EXHIBIT F Form of Engine Warranty Assignment and Engine Consent
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1, 1998
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee" and
the "Initial Owner Participant"), CESSNA FINANCE CORPORATION, a Kansas
corporation (herein, together with its successors and permitted assigns, the
"Owner Participant"), STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as otherwise expressly stated herein, but solely as owner
trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise expressly
stated herein, but solely as indenture trustee under the Indenture referred to
below (in such capacity as trustee, together with its successors and permitted
assigns, the "Indenture Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as pass through trustee of three
separate Pass Through Trusts (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
subordination agent (in such capacity as trustee, together with its successors
and permitted assigns, the "Subordination Agent").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, on the Certificate Closing Date, the Lessee, the Initial
Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Subordination Agent entered into the Original Participation
Agreement (such term, and all other terms not heretofore defined, having the
meanings assigned thereto as provided in Article 1 below);
WHEREAS, immediately prior to the execution and delivery of the
Original Participation Agreement, the Initial Owner Participant entered into
the Original Trust Agreement relating to the Aircraft with SSB, pursuant to
which SSB agreed, among other things, to hold the Lessor's Estate for the
benefit of the Initial Owner Participant on the terms specified in the Trust
Agreement, subject to the Lien of the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing occurred
with respect to the public offering of Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering was
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Original Indenture for the benefit of the Pass Through
Trustee, pursuant to which the Owner Trustee issued the Certificates to the
Subordination Agent on behalf of the Pass Through Trustee as evidence of the
loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of
which loans were deposited by the Indenture Trustee on behalf of the Owner
Trustee in the Collateral Account;
WHEREAS, the Certificates are held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee
for each of the Pass Through Trusts;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, (i) the Liquidity Provider entered into two
revolving credit agreements (each, a "Liquidity Facility"), one for the benefit
of the holders of Pass Through Certificates of each of the Pass Through Trusts
for the Series A Certificates and the Series B Certificates, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, each Liquidity
Provider and the Subordination Agent entered into the Intercreditor Agreement;
WHEREAS, any Series C Certificates outstanding after the Delivery
Date that are subject to prepayment on the Series C Prepayment Date will be
secured by the Liquid Collateral up to and including the Series C Prepayment
Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Lessee entered into
the Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee on the Delivery Date, and the Lessee agreed to lease the
Aircraft from the Owner Trustee on the Delivery Date;
WHEREAS, the Initial Owner Participant wishes to transfer its
Beneficial Interest to the Owner Participant on the Delivery Date and the Owner
Participant wishes to acquire such Beneficial Interest from the Initial Owner
Participant;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Owner Participant to purchase
the Aircraft from the Lessee on the Delivery Date subject to the terms and
conditions of this Agreement, the Engine Warranty Assignment, AVSA's FAA Bill
of Sale and AVSA's Warranty Bill of Sale;
WHEREAS, to fund the Owner Trustee's purchase of the Aircraft on
the Delivery Date, the Indenture Trustee will, subject to the conditions
precedent set forth herein, release the amounts held in the Collateral Account;
and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
the Indenture Trustee, the Pass Through Trustee and the Subordination Agent
have agreed, to the extent they are parties thereto and, subject to the terms
and conditions hereinafter provided, to amend and restate the Original
Participation Agreement, the Original Indenture, the Original Lease and the
Original Trust Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree, subject to the terms
and conditions hereinafter provided, that the Original Participation Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions
set forth in Schedule II hereto are incorporated herein for all purposes of
this Agreement and shall be equally applicable to both the singular and the
plural forms of the terms so defined.
ARTICLE 2
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved].
Section 2.02. [Reserved].
Section 2.03. Amendments on Delivery Date. (a) Amendment and
Restatement of Certain Documents. Upon transfer by the Initial Owner
Participant of its Beneficial Interest on the Delivery Date (as contemplated by
Section 3.02(a) hereof), the parties hereto shall enter into amendments and
restatements of the Original Trust Agreement, the Original Lease and the
Original Indenture, which amendments and restatements shall reflect such
changes as shall have been requested by the Owner Participant, agreed to by the
Lessee and, if modified in any material respect, as to which Rating Agency
Confirmation shall have been obtained from each Rating Agency by the Lessee (to
be delivered by the Lessee to the Pass Through Trustee on or before the
Delivery Date); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
(b) Pre-Delivery Date Adjustments to Owner Participant's
Commitment, Basic Rent, Stipulated Loss Values, Termination Values, EBO Price,
Initial Amount of Series C Certificates and the Debt Amortization for Series A,
B and C Certificates. On or prior to the Delivery Date, the percentages for
Owner Participant's Commitment (+/-5%), for Basic Rent referred to in Schedule
II of the Lease and for Stipulated Loss Value and Termination Value referred to
in Schedule III and Schedule IV, respectively, of the Lease, the EBO Price, the
initial amount of the Series C Certificates and the debt amortization for the
Series A, B and C Certificates shall be adjusted (upward or downward)
(maintaining the Owner's Economic Return and the Mandatory Economic Terms),
subject to the procedures set forth in Section 3.04 of the Lease and the
minimum values established by Section 3.05 of the Lease and the definitions of
Stipulated Loss Value and Termination Value, to reflect changes in the pricing
assumptions with respect to (i) the Delivery Date being other than August 27,
1998, (ii) a different rate of interest or amortization schedule assumed by the
Owner Participant in calculating such percentages from that assumed by the
Owner Participant in originally calculating such percentages, (iii) Transaction
Costs being other than as assumed in Section 10.01 hereof, (iv) any change in
the length of the Basic Term (but in no event shall the Term exceed 25 years)
and (v) a Change in Tax Law which occurs after the date of the execution of
this Agreement but on or prior to the Delivery Date, provided that the Owner
Participant shall not be required to make any adjustment to the lease structure
unless it, in its reasonable judgment, believes such adjustment is in
compliance with such Change in Tax Law. If as a result of such adjustment, the
adjusted Net Present Value of Rents expressed as a percentage of the Purchase
Price discounted at 6.50% is increased by more than 100 basis points, the
Lessee shall have the right to terminate its commitment and will have no
further obligations other than with respect to the Transaction Costs as
described in Section 3.04 hereof.
In connection with the foregoing adjustments, (i) on the Delivery
Date the Subordination Agent, on behalf of the Pass Through Trustee, shall
submit the Certificates to the Indenture Trustee, on behalf of the Owner
Trustee, for attachment thereto of an amended Schedule I and the making of
other related amendments and (ii) the Pass Through Trustee shall mail to the
holders of Pass Through Certificates a statement pursuant to Section 5.03 of
the Pass Through Agreement setting forth the revised Pool Balance and Pool
Factors as if the Delivery Date were a Special Distribution Date.
On the Delivery Date, the Lessee, on behalf of the Owner Trustee,
shall provide written notice to the Indenture Trustee of the aggregate
principal amount of the Series C Certificates, if any, which shall, subject to
any decrease therein under Section 2.19 of the Indenture on any Adjustment
Date, be subject to prepayment on the Series C Prepayment Date pursuant to
Section 2.03(b) of the Original Participation Agreement. On any Adjustment
Date and on the Series C Prepayment Date in the event of any prepayment of such
Series C Certificates, the Owner Trustee shall deliver and the Subordination
Agent on behalf of the Pass Through Trustee of each Pass Through Trust shall
accept delivery of an amended Schedule I to each Series C Certificate
containing such changed principal installments. If any Adjustment Date occurs
later than the Delivery Date, the Lessee shall cause any required filing and
recording of the affected documents with the Aeronautics Authority to be
effected on such date.
The Owner Trustee will give not less than 2 days notice of any
such proposed amendment which is to be effected prior to or on the Delivery
Date.
The Certificates and the amendments and restatements of the
Original Lease and the Original Indenture shall each reflect the amendments
contemplated by this Section 2.03(b).
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee
agrees to give the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the estimated
amount of the Owner Participant's Commitment, the estimated Debt Portion, the
Delivery Date for the Aircraft, the serial number of the Airframe and each
Engine, and the Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement and of the Commitment Letter, on the Delivery Date, (i) subject to
the proviso to this Section 3.02(a), the Indenture Trustee agrees to release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account together with the Lessee Shortfall (as defined in clause (iii) below),
if any, to the Owner Trustee for application to the Purchase Price as provided
below, (ii) the Initial Owner Participant agrees to transfer its Beneficial
Interest to the Owner Participant in consideration for the Owner Participant's
participation in the Lessor's payment of the Purchase Price through an
investment in the Lessor's Estate in an amount equal to the amount set forth
opposite the Owner Participant's name in Schedule I hereto, (iii) subject to
the proviso to this Section 3.02(a), the Lessee agrees to pay to the Indenture
Trustee the excess, if any, of (I) the Debt Portion over (II) such amount as
may then be held in the Collateral Account (the "Lessee Shortfall") as provided
in Section 17.02(a) hereof, and (iv) pursuant to the Purchase Agreement as
assigned pursuant to the Purchase Agreement Assignment, AVSA shall sell the
Aircraft to the Owner Trustee and the Owner Trustee shall immediately
thereafter lease the Aircraft to the Lessee pursuant to the Lease. In
consideration for the assignment to the Owner Trustee by the Lessee under the
Purchase Agreement Assignment of the Lessee's right to purchase the Aircraft
for the remaining balance due under the Purchase Agreement and for the transfer
of title to the Aircraft from AVSA to the Owner Trustee, the following cash
payments will be made by wire transfer of immediately available funds on the
Delivery Date: (A) by the Owner Trustee to AVSA, an amount equal to the
remaining balance due to AVSA under the Purchase Agreement for the Aircraft, as
evidenced by the Invoice, (B) by the Owner Trustee to the Lessee, an amount
equal to the Purchase Price minus the cash payment to AVSA pursuant to clause
(A) above, and (C) by the Indenture Trustee, on behalf of the Owner Trustee, if
the Indenture Trustee is so instructed by the Lessee, to one or more
Outstanding C Accounts, the excess (or a portion of the excess) of any amounts
then held in the Collateral Account over the Debt Portion; provided, however,
that if (1) the Delivery Date has been postponed, (2) the investments
contemplated by Section 2.14(b) of the Indenture have been made, (3) such
investments do not mature on the rescheduled Delivery Date and (4) the Lessee
elects not to break such investments, then the Indenture Trustee shall not
release amounts in the Collateral Account to the Owner Trustee and the Lessee
shall accept as payment of the Purchase Price by the Owner Trustee an amount
equal to the Owner Participant's Commitment and the Indenture Trustee shall pay
to the Lessee at the end of the applicable investment period referred to in
Section 2.14(b) of the Indenture an amount equal to the Debt Portion or such
lesser amount as may then be held in the Collateral Account. After the Delivery
Date, any amounts remaining in the Collateral Account shall secure the Secured
Obligations relating to any Series C Certificates outstanding after the
Delivery Date that are subject to prepayment on the Series C Prepayment Date
pursuant to Section 6.02(a)(viii) of the Indenture.
(b) Payment of Commitment. The Owner Participant agrees with
the Lessee and only with the Lessee on behalf of the Owner Trustee, subject to
the terms and conditions of this Agreement and the Commitment Letter, to make
the amount of its Commitment available for and on account of the Owner Trustee
on the Delivery Date specified in the Delivery Notice pursuant to Section 3.01
hereof by wire transfer, initiated by 10:00 a.m. (New York City time on such
day) of such amount in immediately available funds, to the Owner Trustee for
deposit in its account at State Street Bank and Trust Company, Boston,
Massachusetts, ABA Number: 011-000-028, Account Name: FedEx Equity Payments,
Account Number: HT5639, Attention: Chrissey Mullen, Re: FedEx Equity Payment
Account. The amount of the Owner Participant's Commitment shall be held for
the account of the Owner Participant by the Owner Trustee until released by the
Owner Participant or its special counsel at closing or until returned to the
Owner Participant in accordance with Section 3.02(c) hereof.
(c) No Obligation to Increase Commitments; Delayed Delivery.
(i) If the Indenture Trustee shall default in its obligation to make the amount
of its Debt Portion available pursuant hereto, the Owner Participant shall have
no obligation to make any portion of such Debt Portion available or to increase
the amount of its Commitment, but the obligations of the Owner Participant
shall nevertheless remain subject to the terms and conditions of this
Agreement.
(ii) Subject to the provisions of Section 3.05 hereof, if the
closing of the transactions contemplated by the Operative Agreements shall not
have been consummated by 2:00p.m. (New York City time), or such earlier time as
directed by the Lessee, on the Scheduled Delivery Date, the Owner Trustee
shall, if instructed in writing by the Lessee, at the risk and expense of the
Lessee, use its reasonable best efforts to cause the Owner Participant's
Commitment to be invested and reinvested to the extent practicable at the
direction received by it from the Lessee (with a copy to the Owner
Participant), at the risk of the Lessee, in Permitted Investments; provided,
however, that in the absence of instructions by 2:00 p.m. (New York City time)
the Owner Trustee shall use its reasonable best efforts to cause such amount or
the proceeds thereof to be invested and reinvested to the extent practicable in
overnight Eurodollar time deposits. Earnings on any such investments shall be
applied to the Lessee's payment obligations, if any, to the Owner Participant
pursuant to the next succeeding paragraph, and the balance, if any, of such
earnings remaining after such application shall be paid in accordance with the
Lessee's written instructions.
If for any reason (i) the Operative Agreements shall not be
executed and delivered by the respective parties thereto and/or the delayed
Delivery Date shall not occur (whether by reason of a failure to meet a
condition precedent thereto set forth in Article 4 hereof or otherwise) on or
before the third Business Day after the Scheduled Delivery Date (or earlier if
requested by the Owner Participant) or, if earlier, September 30, 1998, or (ii)
the Lessee has notified the Owner Trustee (with a copy to the Owner
Participant) prior to 2:00 p.m. (New York City time) on any date after the
Scheduled Delivery Date that it does not intend to go forward to close the
transactions contemplated hereby for such Delivery Date, the Owner Participant
may cancel any funding arrangements made to fund its Commitment on the
Scheduled Delivery Date but the Owner Participant's Commitment hereunder with
respect to the Aircraft shall not be terminated thereby until September 30,
1998, whereupon the Owner Participant's Commitment hereunder shall terminate.
On such third Business Day (or such earlier date) or September 30, 1998, as the
case may be, or the earliest practicable Business Day thereafter, the Owner
Trustee shall return the amounts held by it hereunder to the Owner Participant,
provided that the Owner Trustee shall have had a reasonable time to liquidate
any Permitted Investments it has been authorized to invest in pursuant to the
preceding paragraph and to obtain the proceeds therefrom in funds of the type
originally received, and the Lessee shall pay interest on such funds to the
Owner Participant at the full-term implicit lease rate (which rate shall not be
less than the Owner Participant's cost of funds), such interest to be payable
for the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any
loss incurred by the Owner Trustee as a result of the investment of funds by
the Owner Trustee in accordance with the terms of this Section 3.02(c).
Further, the Lessee shall indemnify the Owner Trustee and hold it harmless from
and against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Owner Participant's Instructions to Owner Trustee.
The Owner Participant agrees that the release of its Commitment in accordance
with the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the actions
specified in Sections 1.01(a) and (c) of the Trust Agreement and confirmation
that all conditions to closing set forth in Section 4.01 hereof were either met
to the satisfaction of the Owner Participant or, if not so met, were in any
event waived by it.
Section 3.04. Transaction Costs. If the transactions
contemplated by this Article 3 are consummated, as and when any portion of
Transaction Costs becomes due and payable, the Owner Participant shall, as soon
as practicable upon receipt of bills or invoices for the amounts payable make
such payments or, if the Lessee shall have already made such payment, shall
reimburse the Lessee therefor or shall, as soon as practicable, furnish the
Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as
practicable, make payment of such portion to the Person or Persons entitled to
payment upon presentation to the Owner Trustee of bills or invoices for the
amount of such payment; provided that the Owner Participant will only be
responsible for actual Transaction Costs to the extent they do not exceed the
amount assumed in Section 10.01 hereof unless the schedules of Basic Rent,
Stipulated Loss Values, Termination Values and EBO Price have been adjusted
pursuant to Section 2.03(b) hereof, and provided further that the Owner
Participant will only be responsible for Transaction Costs that are related to
the negotiation, preparation, execution, delivery, filing and recording of the
Operative Agreements. If such transactions are not consummated, the Lessee
shall pay or cause to be paid all the Transaction Costs; provided, however that
if the failure of such transactions to be consummated is due to (i) a failure
of the Owner Participant to obtain investment approval to proceed with the
transactions contemplated hereby or (ii) a failure to comply with its
obligations under the Operative Agreements, the Lessee shall have no obligation
to pay those costs and expenses incurred directly by the Owner Participant in
connection with the transactions contemplated by this Agreement described in
Sections 10.01(a)(i) and (xi) hereof, but the Lessee shall be obligated to pay
all other Transaction Costs.
Section 3.05. Postponement of Delivery Date. (a) If the Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available on the Scheduled Delivery Date in accordance with the
terms of Section 3.02 hereof, the Owner Trustee will promptly give each party
confirmed facsimile notice thereof and the Lessee shall postpone the Delivery
Date to a date not later than the Cut-Off Date. If the Owner Participant shall
for any reason fail or refuse to make the full amount of its Commitment
available in accordance with the terms of Section 3.02 hereof on such postponed
Delivery Date, the Lessee shall endeavor during such period to identify another
equity investor to whom it can assign its Beneficial Interest. If the Lessee
identifies an equity investor, the Lessee shall assign its interest in the
Lessor's Estate as provided above. In case of any such conveyance (but subject
to the satisfaction of the conditions precedent specified herein), the
Indenture Trustee shall release the Debt Portion or such lesser amount as may
then be held in the Collateral Account for application to the payments
contemplated in the last sentence of Section 3.02(a) hereof, subject to the
proviso to Section 3.02(a) hereof. For the avoidance of doubt, it is
understood and agreed that if for any reason other than the failure of the
Manufacturer or AVSA to deliver the Aircraft, the Lessee does not enter into
the Lease Supplement with the Owner Trustee on or prior to the Cut-Off Date,
the Lessee, the Indenture Trustee and the Pass Through Trustee agree that the
Lessee shall purchase the Aircraft and assume all of the obligations of the
Owner Trustee under the Certificates upon satisfaction of the requirements set
forth in Section 4.01 hereof, as the same may be modified by the provisions of
Section 7.11 hereof and as otherwise necessary to reflect a full recourse
secured aircraft financing of the Lessee.
(b) Release of Obligations. If the Delivery Date has not
occurred on or prior to the Cut-Off Date (including by reason of the Aircraft
not being completed and delivered, the Owner Participant's failure to make the
full amount of its Commitment available in accordance with the terms of Section
3.02 hereof and no transferee Owner Participant having been identified pursuant
to Section 3.05(a) hereof), then, in such event, the Owner Trustee shall not
purchase the Aircraft from AVSA, and subject to the last sentence of Section
3.05(a) hereof the parties to the Operative Agreements shall have no further
obligations or liabilities under any of said Operative Agreements with respect
to the Aircraft, including the obligation of the Owner Participant to
participate in the payment of the Purchase Price, and such documents shall
terminate and have no further force or effect with respect to the Aircraft;
provided, however, that if the last sentence of Section 3.05(a) hereof does not
apply the Lessee shall provide, no later than the Cut-Off Date, notice of
prepayment to the Indenture Trustee and the Certificates shall be prepaid on
the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of
the Original Indenture and Section 17.02(c) hereof and provided further, that
(i) the Lessee's obligation to pay any Transaction Costs as provided in Section
3.04 hereof (to the extent such section is applicable) and to indemnify such
parties to the extent provided in such documents, shall not be diminished or
modified in any respect and (ii) the obligations of the Owner Trustee, the
Indenture Trustee and the Lessee to return funds and pay interest, costs,
expenses and other amounts thereon or in respect thereof as provided in Section
3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(c) hereof, the Scheduled Delivery Date may be postponed from time
to time (but in no event shall the Delivery Date be later than the Cut-Off
Date) for any reason, other than pursuant to Section 3.05(a) hereof, if the
Lessee gives the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee confirmed facsimile notice (or telephone notice
followed by written confirmation) of such postponement and notice of the date
to which the Delivery Date has been postponed, such notice of postponement to
be received by each party no later than 11:00 a.m. (New York City time) on the
Business Day preceding the Scheduled Delivery Date.
Section 3.06. Closing. The closing with respect to the purchase
and lease of the Aircraft on the Delivery Date shall take place at the offices
of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. Subject to the last
paragraph of this Section 4.01, the obligations of the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Delivery Date are subject to the
fulfillment to the satisfaction of each party (or waiver by such party), prior
to or on the Delivery Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Notice, Etc. Each party hereto shall have received a
Delivery Notice pursuant to Section 3.01 hereof at least three (3)
Business Days prior to the Delivery Date.
(b) Legal Investment. No change shall have occurred after the
date which is two days prior to the Delivery Date in applicable laws or
regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Owner Participant, the Lessee, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the
Indenture Trustee, and no change in circumstances shall have occurred
which would otherwise make it illegal or otherwise in contravention of
guidance issued by regulatory authorities for the Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Delivery Date; and no action or proceeding shall have
been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Owner Participant, the Indenture Trustee, the
Subordination Agent or the Pass Through Trustee is not frivolous, nor
shall any order have been issued or proposed to be issued by any court, or
governmental authority or agency, as of the Delivery Date, to set aside,
restrain, enjoin or prevent the consummation of any of the transactions
contemplated by this Agreement or by any of the other Operative
Agreements.
(c) Documents. The following documents shall have been duly
authorized, executed and delivered by the respective party or parties
thereto, shall each be satisfactory in form and substance to the LC Bank,
the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent and the Owner Participant (each acting
directly or by authorization to its special counsel) and shall each be in
full force and effect; there shall not have occurred any default
thereunder, or any event which with the lapse of time or the giving of
notice or both would be a default thereunder, and copies executed or
certified as requested by the LC Bank, the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee or the Owner Participant, as
the case may be, of such documents shall have been delivered to the LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of the amended and restated Lease, the Lease
Supplement and the Ancillary Agreement I shall be delivered to the
Indenture Trustee):
(i) this Agreement, as amended and restated as of the date
hereof;
(ii) the Lease, as amended and restated as of the date hereof;
(iii) the Trust Agreement, as amended and restated as of the
date hereof;
(iv) the Indenture, as amended and restated as of the date
hereof;
(v) the Lease Supplement covering the Aircraft, dated the
Delivery Date;
(vi) the Indenture and Security Agreement Supplement covering
the Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax
Indemnity Agreement;
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Engine Warranty Assignment;
(xi) the Engine Consent;
(xii) the Purchase Agreement Assignment and the French Pledge
Agreement with respect thereto;
(xiii) AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale and
the Airbus Guaranty;
(xiv) the Consent and Agreement and the AVSA Consent and
Agreement;
(xv) the GTA;
(xvi) a redacted version of the Purchase Agreement and the
Consent and Guaranty; and
(xvii) the Owner Participant Guaranty.
(d) Legal Opinions. The Owner Participant, the Owner
Participant Guarantor, the Underwriters, the Lessee, the Owner Trustee,
the Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case
satisfactory to the Owner Participant, the Owner Participant Guarantor,
the Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, as the case may be, as to scope and substance
(and covering such other matters as the recipient may reasonably request)
and dated the Delivery Date:
(i) Karen M. Clayborne, Senior Vice President and
General Counsel of the Lessee, in the form of Exhibit A(1)(a)
hereto and addressed to the Underwriters, the Owner Participant,
the Owner Participant Guarantor, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Indenture
Trustee;
(ii) Davis Polk & Wardwell, special counsel for the
Lessee, in the form of Exhibit A(1)(b) hereto and addressed to
the Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Chadbourne & Parke LLP, special counsel for the
Owner Participant and the Owner Participant Guarantor, in the
form of Exhibit A(2)(a) hereto and the General Counsel's Office
of the Owner Participant and the Owner Participant Guarantor, in
the form of Exhibit A(2)(b) hereto, each addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iv) Ray, Quinney & Nebeker, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Participant Guarantor, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, each Liquidity Provider and the Lessee;
(v) Bingham Dana LLP, special counsel for the Owner
Trustee, in the form of Exhibit A(4) hereto and addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(vi) Ray, Quinney & Nebeker, special counsel for the
Pass Through Trustee and the Subordination Agent, in the form of
Exhibit A(5) hereto and addressed to the Underwriters, the Owner
Participant, the Owner Participant Guarantor, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee, each
Liquidity Provider and the Lessee;
(vii) counsel for the Engine Manufacturer, in the form
of Exhibit A(6) hereto and addressed to the Underwriters, the
Owner Participant, the Owner Participant Guarantor, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee, each
Liquidity Provider and the Lessee;
(viii) Clifford Chance, special counsel for AVSA and
the Manufacturer, in the form of Exhibit A(7) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Participant Guarantor, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, each Liquidity Provider and the Lessee;
(ix) Daugherty, Fowler & Peregrin, special aviation
counsel, in the form of Exhibit A(8) hereto and addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee; and
(x) in the case of the Owner Participant only,
Chadbourne & Parke LLP, special tax counsel to the Owner
Participant, addressed to the Owner Participant, with respect to
certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery
Date, the following statements shall be true, and the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
shall have received evidence from the Lessee reasonably satisfactory to
the Owner Participant, the Indenture Trustee, the Pass Through Trustee and
the Owner Trustee to the effect that:
(i) the Owner Trustee has good and marketable title
(subject to filing and recording of AVSA's FAA Bill of Sale with
the Aeronautics Authority) to the Aircraft, free and clear of
Liens, except the rights of the Owner Trustee and the Lessee
under the Lease and the Lease Supplement covering the Aircraft,
the rights of the Indenture Trustee under the Indenture and the
beneficial interest of the Owner Participant created by the Trust
Agreement and the interest of the Certificate Holders created by
the Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft, which evidence shall include AVSA's FAA
Bill of Sale, AVSA's Warranty Bill of Sale and the Airbus
Guaranty;
(ii) the Aircraft has been duly certificated by the
Aeronautics Authority as to type and airworthiness in accordance
with the terms of the Operative Agreements;
(iii) AVSA's FAA Bill of Sale, the amended and
restated Lease and the Lease Supplement covering the Aircraft,
the amended and restated Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft and the amended and
restated Trust Agreement shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Aeronautics Authority pursuant to the
Transportation Code; and
(iv) application to the Aeronautics Authority for
registration of the Aircraft in the name of the Owner Trustee
shall have been duly made and the Lessee shall have temporary or
permanent authority to operate the Aircraft.
(f) Financing Statements. (i) a form UCC-1 financing statement
covering all the security interests (and other interests) created by or
pursuant to the Granting Clause of the Original Indenture shall have been
executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
such financing statement shall have been duly filed in the State of
Connecticut; (ii) a form UCC-3 financing statement to amend and restate
the financing statement referred to in the immediately preceding sentence
shall have been executed and delivered by the Owner Trustee, as debtor,
and by the Indenture Trustee as secured party, and a form UCC-1 financing
statement covering all the security interests (and other interests)
created by or pursuant to the Granting Clause of the Indenture shall have
been executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
concurrently with the transactions contemplated on the Delivery Date such
UCC-3 financing statement and UCC-1 financing statement shall have been
duly filed or duly submitted for filing in the State of Connecticut, and
all other actions shall have been taken which, in the opinion of special
counsel for the Pass Through Trustee or for the Underwriters, are
necessary or desirable to maintain the perfection of the security interest
created by or pursuant to the Granting Clause of the Indenture, and (iii)
a UCC-1 notice filing describing the Lease as a lease shall have been
executed and delivered by the Owner Trustee, as lessor, and the Lessee, as
lessee (which filing shall name the Indenture Trustee as assignee of the
Owner Trustee), and shall have been duly filed in the State of Tennessee.
(g) Payments. The Owner Participant shall have made available
its Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13
of the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges,
assessments, costs and other expenses then due and payable in connection
with the execution, delivery, recording and filing of all financing
statements and the documents and instruments referred to in subparagraphs
(e) and (f) of this Section 4.01, or in connection with the purchase of
the Aircraft by the Owner Trustee and the making by the Owner Participant
of its equity investment shall have been duly paid or caused to be paid in
full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Delivery Date which are then due and payable shall have been duly
paid in full.
(k) No Indenture Event of Default. No Indenture Event of
Default or Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or
Event of Default under the Lease (assuming, for this purpose, that the
provisions of Article 16 of the Lease had become operative on the
Certificate Closing Date and not the Delivery Date) or Event of Loss or
event, which with the passage of time or if continued unremedied or
unaltered would constitute an Event of Loss, shall have occurred or be in
existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued,
and all such permits shall be in full force and effect on the Delivery
Date.
(n) Corporate Documents. Except when such Person is the
delivering party, the LC Bank, the Owner Participant, the Owner Trustee,
the Pass Through Trustee, the Lessee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
the following, in each case in form and substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws
of the Lessee, certified by the Secretary or an Assistant
Secretary of the Lessee as of the Delivery Date, and a copy of
the minutes of the regular meeting of the board of directors of
the Lessee, certified as such as of the Delivery Date by such
Secretary or Assistant Secretary, duly authorizing the lease by
the Lessee of the Aircraft under the Lease and the execution,
delivery and performance by the Lessee of this Agreement, the
Lease, the Tax Indemnity Agreement, the other Operative
Agreements to which the Lessee is or is to be a party and each
other document to be executed and delivered by the Lessee in
connection with the transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of
the Owner Participant and the Owner Participant Guarantor, each
certified by the Secretary or an Assistant Secretary of the Owner
Participant or the Owner Participant Guarantor as of the Delivery
Date and a copy of the resolutions of the board of directors of
the Owner Participant, certified as such as of the Delivery Date
by such Secretary or Assistant Secretary, duly authorizing the
execution and delivery by the Owner Participant of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and
the other Operative Agreements to which the Owner Participant is
or is to be a party and each other document to be executed and
delivered by the Owner Participant in connection with the
transactions contemplated hereby, and a copy of the resolutions
of the board of directors of the Owner Participant Guarantor,
certified as such as of the Delivery Date by the Secretary or an
Assistant Secretary, authorizing the execution and delivery by
the Owner Participant Guarantor of the Owner Participant Guaranty
and the other Operative Agreements to which such Owner
Participant Guarantor is or is to be a party and each other
document to be executed and delivered by the Owner Participant
Guarantor in connection with the transactions contemplated
hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the
Secretary or an Assistant Secretary of the Owner Trustee as of
the Delivery Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Owner Trustee in its
individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Trust Agreement and each of the other
Operative Agreements to which it is or is to be a party, whether
in its individual capacity or as Owner Trustee, and each other
document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the articles of association and by-laws and
other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as
of the Delivery Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Indenture Trustee
of each of this Agreement, the Indenture and each of the other
Operative Agreements to which it is or is to be a party, and each
other document to be executed and delivered by the Indenture
Trustee in connection with the transactions contemplated hereby;
(v) a copy of the articles of association and by-laws and
other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee
as of the Delivery Date (or other like instruments satisfactory
to the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Pass Through
Trustee of this Agreement and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Pass Through Trustee
in connection with the transactions contemplated hereby;
(vi) a copy of the articles of association and by-laws and
other instruments of the Subordination Agent, certified by the
Secretary or an Assistant Secretary of the Subordination Agent as
of the Delivery Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Subordination
Agent of this Agreement and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Subordination Agent
in connection with the transactions contemplated hereby; and
(vii) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner
Participant as the Indenture Trustee, the Pass Through Trustee,
the Owner Participant or the LC Bank may reasonably request in
order to establish the consummation of the transactions
contemplated by this Agreement.
(o) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee shall have received a certificate signed by the Vice President and
Treasurer or any other duly authorized officer of the Lessee, dated the
Delivery Date, stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and
as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true
and correct on and as of such earlier date);
(ii) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, as to which such officer will
make no certification concerning the liability of the Lessee (if
any), or the effect of any adverse determination upon the
consolidated financial condition, business or operations of the
Lessee, no material adverse change has occurred in the financial
condition, business or operations of the Lessee from that shown
in the audited financial statements of the Lessee as of May 31,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is
to be a party; and
(iii) no event has occurred and is continuing, or would
result from the purchase, sale, mortgage, or lease of the
Aircraft, which constitutes an Event of Loss (or event which with
the passage of time would become an Event of Loss) with respect
to the Airframe or any Engine, or a Default or an Event of
Default under the Lease.
(p) Officer's Certificates of Owner Participant and Owner
Participant Guarantor. On the Delivery Date, the following statements
shall be true, and the LC Bank, the Lessee, the Pass Through Trustee, the
Owner Trustee and the Indenture Trustee shall have received a certificate
from (a) the Owner Participant, signed by a duly authorized officer of the
Owner Participant dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and
any other Operative Agreement (excluding the Tax Indemnity
Agreement) to which it is a party and in any certificate
delivered pursuant hereto or thereto, are true and correct on and
as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true
and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which
constitutes or, with notice or lapse of time or both would
constitute, due to any action or omission on the part of the
Owner Participant, an Indenture Event of Default other than an
Indenture Event of Default attributable to a Lease Event of
Default;
and (b) from the Owner Participant Guarantor, signed by a duly authorized
officer of the Owner Participant Guarantor dated the Delivery Date,
stating that the representations and warranties of the Owner Participant
Guarantor contained in its Owner Participant Guaranty and in any
certificate delivered at the closing pursuant thereto are true and correct
on and as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as of
such earlier date).
(q) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner
Participant, the Lessee, the Pass Through Trustee, the Owner Trustee, the
Subordination Agent and the Indenture Trustee shall have received a
certificate from each of SSB and the Owner Trustee (in the case of the LC
Bank, the Lessee, the Pass Through Trustee, the Owner Participant, the
Subordination Agent and the Indenture Trustee), FSB and the Indenture
Trustee (in the case of the LC Bank, the Lessee, the Pass Through Trustee,
the Owner Participant, the Subordination Agent and the Owner Trustee), FSB
and the Pass Through Trustee (in the case of the LC Bank, the Lessee, the
Indenture Trustee, the Owner Participant, the Subordination Agent and the
Owner Trustee) and FSB and the Subordination Agent (in the case of the LC
Bank, the Lessee, the Indenture Trustee, the Owner Participant, the Pass
Through Trustee and the Owner Trustee) signed by a duly authorized officer
of SSB and FSB, respectively, dated the Delivery Date, stating with
respect to SSB and the Owner Trustee, with respect to FSB and the
Indenture Trustee, with respect to FSB and the Pass Through Trustee or
with respect to FSB and the Subordination Agent, as the case may be, that:
(i) the representations and warranties of SSB in its
individual capacity and as Owner Trustee, of FSB in its
individual capacity and as Indenture Trustee, of FSB in its
individual capacity and as Pass Through Trustee or of FSB in its
individual capacity and as Subordination Agent contained in this
Agreement, the Lease, the Trust Agreement and the Indenture and
in any certificate delivered pursuant hereto or thereto are true
and correct on and as of the Delivery Date as though made on and
as of such date (except to the extent that such representations
and warranties relate solely to an earlier date, in which case
such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) to the best of its knowledge, no event has occurred and
is continuing, which constitutes or which, but for the lapse of
time or the giving of notice, or both, would constitute, due to
any action or omission on the part of SSB in its individual
capacity or as Owner Trustee, of FSB in its individual capacity
or as Indenture Trustee, of FSB in its individual capacity or as
Pass Through Trustee, an Event of Default or an Indenture Event
of Default or of FSB in its individual capacity or as
Subordination Agent, an Event of Default or an Indenture Event of
Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or SSB and no Indenture Trustee's Liens affecting the
Trust Indenture Estate or the Lessor's Estate or any part
thereof.
(r) Release of Debt Portion. Except as set forth in the proviso
to Section 3.02(a) hereof, the Indenture Trustee shall have released the
Debt Portion from (or such lesser amount as may then be held in) the
Collateral Account.
(s) Outstanding C Accounts. Any amount withdrawn by the
Indenture Trustee from the Collateral Account and not used to pay the Debt
Portion of the Purchase Price of the Aircraft shall be deposited into one
or more Outstanding C Accounts.
(t) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date in connection
with the amendments contemplated by Section 2.03(a) hereof, the Lessee
shall have delivered a certificate to the Pass Through Trustee and the
Liquidity Providers signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee stating that (i) the Operative
Agreements which are amended and restated as of the Delivery Date do not
vary the Mandatory Economic Terms and contain the Mandatory Document Terms
and (ii) any substantive modification of such documents from those in
effect on the Certificate Closing Date does not materially and adversely
affect the Holders of Pass Through Certificates or any Liquidity Provider
and such certification shall be true and correct.
(u) Rating Agency Confirmation. A Rating Agency Confirmation
shall have been delivered to the Pass Through Trustee.
(v) Section 131.3 of the New York State Banking Law Filing. SSB
shall have delivered evidence of its filing made with the New York
Superintendent of Banking pursuant to Section 131.3 of the New York State
Banking Law.
(w) No Adverse Change in Tax Law. No Change in Tax Law shall
have occurred for which an adjustment to the lease structure, satisfactory
to the Owner Participant, shall not have been or cannot be made.
Notwithstanding anything else to the contrary in this Section 4.01, it shall
not be a condition precedent to the obligations of the Indenture Trustee, the
Pass Through Trustee or the Subordination Agent that the conditions in Section
4.01(o) and (p) be satisfied if the Lessee certifies that the failure to
fulfill such condition precedent is not reasonably likely to materially
adversely affect the holders of Pass Through Certificates and, in the event of
such failure, there has been delivered to the Indenture Trustee written
confirmation from both Moody's and S&P of the rating on any class of Pass
Through Certificates.
Section 4.02. Opinion of Special Aviation Counsel Upon
Registration. Promptly upon the registration of the Aircraft and the filing
and, where appropriate, recordation pursuant to the Transportation Code, of
AVSA's FAA Bill of Sale, the Trust Agreement, the Lease (with the Lease
Supplement covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft attached as exhibits) and the
Indenture (with the Indenture and Security Agreement Supplement covering the
Aircraft attached as an exhibit), the Lessee shall cause Special Aviation
Counsel to deliver to the Owner Participant, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due
registration of the Aircraft in the name of the Owner Trustee, (ii) the due
recording pursuant to the Transportation Code of AVSA's FAA Bill of Sale, the
amended and restated Trust Agreement, the amended and restated Lease (with such
Lease Supplement, the amended and restated Indenture and such Indenture and
Security Agreement Supplement attached as exhibits), and the amended and
restated Indenture (with such Indenture and Security Agreement Supplement
attached as an exhibit), and (iii), subject to customary qualifications, the
lack of any intervening documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Delivery Date is subject to the conditions that, on or prior to the
Delivery Date, the Lessee shall have received the documents which are referred
to in, or the opinions to be addressed to it under, as the case may be,
Sections 4.01(c), (d)(ii)-(ix), (e)(ii)-(iv), (h)(ii)-(vi), (p) and (q) hereof
and the Owner Participant shall have made its Commitment available in
accordance with the terms of Section 3.02 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The
Lessee represents and warrants to the Owner Participant, the Owner Trustee (in
its individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, as of the Delivery Date:
(a) the Lessee is a corporation duly organized and validly
existing and is in good standing under the laws of the State of Delaware
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) in Memphis, Tennessee, and is duly
qualified to do business as a foreign corporation and is in good standing
in all jurisdictions in which it has intrastate routes, or offices or
major overhaul facilities or in which other activities of the Lessee
require such qualification;
(b) the Lessee has full power, authority and legal right to
conduct its business and operations as currently conducted and to own or
hold under lease its Properties and to enter into and perform its
obligations under this Agreement, the Original Agreements to which it is a
party, the other Operative Agreements to which it is a party, the Pass
Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee
Documents by the Lessee have been duly authorized by all necessary
corporate action on the part of the Lessee and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of the Lessee, and each such document has
been duly executed and delivered by the Lessee and constitutes the legal,
valid and binding obligations of the Lessee enforceable against it in
accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights generally (regardless of
whether enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body (other than the SEC) is required
for the execution, delivery or performance by the Lessee of the Lessee
Documents or for the use and maintenance of the Aircraft except for such
registrations, applications and recordings referred to in the opinions of
Special Aviation Counsel delivered or to be delivered pursuant to Sections
4.01(d)(ix) and 4.02 hereof and except for the filings referred to in
Section 4.01(f) hereof, all of which shall have been duly obtained or made
and shall be in full force and effect on and as of the Delivery Date, or
as contemplated by said Sections;
(g) neither the execution, delivery or performance by the Lessee
of the Lessee Documents nor compliance with the terms and provisions
hereof or thereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of the Lessee or any order, writ, injunction or decree
of any court or governmental authority against the Lessee or by which it
or any of its Properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which the Lessee is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the
imposition of any Lien upon any of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or
any of its Property before or by any court or administrative agency which
(A) involve the Aircraft, (B) except for the matters described under
"Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, as to which no representation is made
concerning the Lessee's liability (if any) or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, if adversely determined, would materially and
adversely affect the consolidated financial condition, business or
operations of the Lessee, or (C) if adversely determined would adversely
affect the ability of the Lessee to perform its obligations under the
Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns
which are required to be filed and has paid or caused to be paid all taxes
shown to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other
than, in any such case, assessments, the payment of which is being
contested in good faith by the Lessee, as to which no representation is
made concerning the Lessee's liability (if any) or the effect of any
adverse determination upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name
of the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of AVSA's FAA Bill of Sale, the Trust Agreement, the
Affidavits and the Application, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of
the Indenture, the Indenture and Security Agreement Supplement covering
the Aircraft, the Lease and the Lease Supplement covering the Aircraft,
(C) the filing of the financing statements referred to in Section 4.01(f)
hereof and (D) the taking of possession by the Indenture Trustee of the
original counterpart of the Lease, the Lease Supplement covering the
Aircraft and Ancillary Agreement I, no further action, including any
filing or recording of any document, is necessary or advisable in order
(i) to establish the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties, or
(ii) to perfect the first security interest in and mortgage Lien on the
Trust Indenture Estate in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Participant will receive
good and marketable title to the Beneficial Interest, free and clear of
all Liens, except the rights of the Indenture Trustee under the Indenture
and the Owner Trustee will receive good and marketable title to the
Aircraft, free and clear of all Liens, except the rights of the Lessee
under the Lease and the Lease Supplement, the rights of the Indenture
Trustee under the Indenture and the beneficial interest of the Owner
Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1998, and the
related consolidated statements of income, changes in common stockholders'
investment and cash flows for the fiscal year ended on such date,
accompanied by a report thereon containing opinions without qualification,
except as therein noted, by Arthur Andersen LLP, independent public
accountants; said financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied and
present fairly the financial position of the Lessee as of such dates and
the results of its operations and cash flows for such periods and such
Annual Report and financial statements did not, as of their respective
dates of filing with the SEC, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained
therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of
this Section 6.01(m)) nor their related trusts have been
terminated in a distress termination pursuant to Section 4041(c)
of ERISA or by the Pension Benefit Guaranty Corporation (together
with any successor agency or instrumentality thereto, the "PBGC")
pursuant to Section 4042 of ERISA, nor have any actions been
taken to so terminate any Pension Plan or related trust and
neither the Lessee nor any ERISA Affiliate (as defined at the end
of this Section 6.01(m)) has incurred or could reasonably be
expected to incur any material liability with respect to a
Pension Plan under Section 4062, 4063, 4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension
Plan which have resulted or could reasonably be expected to
result in any material liability of the Lessee or any ERISA
Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code)
exists with respect to any Pension Plan, whether or not waived,
nor has any request for a waiver under Section 412(d) of the Code
been, or is reasonably likely to be, filed with respect to any of
the Pension Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal
liability pursuant to Section 4201 or 4204 of ERISA or any
material liability under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the
Lessee nor any ERISA Affiliate has engaged in a "prohibited
transaction" (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to
subject the Lessee to the tax or penalties on prohibited
transactions imposed by Section 4975 of the Code or Section 502
of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and
the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975 of the Code. No part of the funds to be used by the Lessee
in satisfaction of its obligations under this Agreement or any
other of the Operative Agreements to which the Lessee is a party
or to which the Lessee is bound are the assets of any employee
benefit plan subject to Title I of ERISA, or any individual
retirement account or an employee benefit plan subject to Section
4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(e) and
4.01(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Delivery Date under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of
trust, indenture, lease or other instrument or agreement to which the
Lessee is a party or by which it or any of its Properties or assets may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Lessee or its ability to perform any of its
obligations under the Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event,
which with the passage of time or if continued unremedied or unaltered
would constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition
so as to enable the airworthiness certificate of such Aircraft to be in
good standing under the Transportation Code; the Aircraft will have been
duly certificated by the FAA as to type and airworthiness; there will be
in effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects
the value, utility or condition of the Aircraft;
(u) on the Delivery Date, the Lessee shall not be in default in
the performance of any term or condition of the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Warranty Assignment and the GTA
and the aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) on the Delivery Date, the Aircraft will, upon delivery, be
fully equipped to operate in commercial service and will comply with all
governmental requirements governing such service;
(x) there are no broker's or underwriter's fees payable on
behalf of the Lessee in connection with the transactions contemplated in
the Operative Agreements other than those of the Underwriters and First
Chicago Leasing Corporation referred to in Article 10 hereof; and
(y) the representations and warranties of the Lessee set forth in
the Original Agreements to which it is a party were correct on and as of
the Certificate Closing Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust Agreement
other than First Chicago Leasing Corporation. Neither the Lessee nor, based on
representations of First Chicago Leasing Corporation, anyone acting on its
behalf has directly or indirectly offered any interest in the Lessor's Estate
or the Trust Agreement, or similar interests, for sale to, or solicited any
offer to acquire any of the same from, anyone other than the Owner Participant
and no more than 37 other accredited investors (as such term is defined in
Regulation D promulgated under the Securities Act of 1933, as amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants
and agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered all such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner
Participant shall reasonably require for accomplishing the purposes of
this Agreement, the Trust Agreement, the Purchase Agreement, the Purchase
Agreement Assignment, the GTA, the Engine Warranty Assignment, the
Indenture, the Indenture and Security Agreement Supplement, the Tax
Indemnity Agreement, the Lease and the Lease Supplement and the other
Operative Agreements to which it is a party. Without limiting the
generality of this Section 6.03(a), the Lessee will take, or cause to be
taken, at the Lessee's cost and expense, such action with respect to the
recording, filing, re-recording and re-filing of the Indenture, each
Indenture and Security Agreement Supplement, the Lease, each Lease
Supplement and any financing statements or other instruments as may be
necessary, or as requested by the Indenture Trustee and appropriate, to
maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to be duly
registered, and at all times to remain duly registered, in the name of the
Owner Trustee, under the Transportation Code; provided, however, that the
Owner Participant, the Owner Trustee and the Indenture Trustee agree that,
so long as no Default or Event of Default shall have occurred and be
continuing, if at any time after December 31, 2004 the Lessee has
requested their consent to the registration of the Aircraft in the name of
the Owner Trustee (or, if appropriate, in the name of the Lessee or a
sublessee as a "lessee" or a "sublessee"), at the Lessee's expense, in a
country in which a sublessee could be located under the provisions of
Section 7.02(a)(i) of the Lease with which the United States then
maintains normal and full diplomatic relations, upon receipt by the Owner
Participant, the Owner Trustee and the Indenture Trustee of the assurances
and opinion described below, none of them shall unreasonably withhold
their consent to such change in registration (it being agreed, without
limitation, that the inability of the Lessee to deliver such assurances or
such opinion shall constitute reasonable grounds to withhold such
consent).
As a condition to any change in the registration of the Aircraft,
the Owner Participant, the Owner Trustee in its individual and trust
capacities, and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in
and to the Aircraft is recognized and fully enforceable in the
new jurisdiction of registry, that the rights of the Owner
Trustee in and to the Aircraft will not be impaired in such new
jurisdiction of registry and that the new jurisdiction of
registry will give effect to the title and registry of the
Aircraft therein substantially to the same extent as does the
Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as
provided under United States law (except that, in the absence of
restrictions under the laws of such country on rights and
remedies of lessors and secured parties similar to those imposed
by Sections 362 and 363 of the Bankruptcy Code, rights and
remedies similar to those available under Section 1110 of the
Bankruptcy Code shall not be required), and (y)(i) if such change
in registration is made other than in connection with a sublease,
imposes maintenance standards at least comparable to those of the
FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of
the Lease, imposes maintenance standards in conformity with those
set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided
for under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be
effected at the Lessee's own cost and expense all recordings and
filings that are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to
enter into a binding agreement to indemnify) in favor of the
Owner Participant, the Owner Trustee (in its individual capacity
and as trustee under the Trust Agreement), the Indenture Trustee
(in its individual capacity, and as trustee under the Indenture),
the Pass Through Trustee (in its individual capacity, and as
trustee under the Pass Through Agreement) and the other
Indemnitees under this Agreement, the Indenture, the Pass Through
Agreement and (in the case of the Owner Participant only) the Tax
Indemnity Agreement, afford each such party substantially the
same protection as provided prior to such change of registry;
(H) that such change will not result in the imposition of,
or increase in the amount of, any Tax for which the Lessee has
not agreed to indemnify the Owner Participant, the Indenture
Trustee, the Pass Through Trustee, the Owner Trustee (or any
successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee in connection with
such change of registry, including any reasonable attorneys' fees
and expenses; and
(K) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(ii) a favorable opinion of counsel (reasonably satisfactory to
the Owner Trustee, the Indenture Trustee and the Owner Participant) in the
new jurisdiction of registry, addressed and reasonably satisfactory to
such parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal,
valid, binding and enforceable in such jurisdiction against the
Lessee, any sublessee, the Owner Trustee and the Indenture
Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee
to register or qualify to do business or meet other requirements
not already met in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of the Indenture or the Lease) and the
exercise of any rights or remedies with respect to the Aircraft
pursuant to the Lease or the Indenture or in order to maintain
such registration and the Lien of the Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee
as provided under United States law (with the exception described
in paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation,
the remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in
possession thereof under the laws of such jurisdiction, other
than tort liability which might have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any
state thereof (it being understood that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to
cover such risk and the Lessee undertakes to keep such insurance
in full force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft and (unless the
Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation
by the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft
therein substantially to the same extent as does the Government,
and that the Lien of the Indenture shall continue as a first
priority, duly perfected lien on the Aircraft; and
(G) to such further effect with respect to such other
matters as the Owner Participant, the Owner Trustee, or the
Indenture Trustee may reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of- pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with any
inspection or appraisal required or permitted under the Operative Agreements.
Such obligation shall apply only with respect to one inspection or appraisal in
any calendar year unless an Event of Default shall have occurred and be
continuing.
(c) The Lessee shall promptly file any reports, or furnish to
the Owner Trustee and the Owner Participant such information as may be
required to enable the Owner Trustee and the Owner Participant timely to
file any reports required to be filed by the Owner Trustee as the Lessor
and the Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file,
and where appropriate record, on the Delivery Date, AVSA's FAA Bill of
Sale, the Lease, the Lease Supplement, the Trust Agreement, the Indenture
and the Indenture and Security Agreement Supplement. The following
documents shall be filed and, where appropriate, recorded on the Delivery
Date with the Aeronautics Authority in the following order of priority:
first, AVSA's FAA Bill of Sale, second, the Application, with the Trust
Agreement and the Affidavits, third, the Indenture with the Indenture and
Security Agreement Supplement attached thereto, and fourth, the Lease with
the Lease Supplement, the Indenture and the Indenture and Security
Agreement Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, an
opinion, reasonably satisfactory to the Owner Participant and the
Indenture Trustee, of Special Aviation Counsel, or other counsel specified
from time to time by the Lessee acceptable to the Lessor and the Indenture
Trustee: (i) stating either (1) that in the opinion of such counsel such
action has been taken with respect to the recording, filing, re-recording
and re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as
is necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created
by said documents and reciting the details of such action, or (2) that in
the opinion of such counsel no such action is necessary to maintain such
title or the perfection of such security interests; (ii) specifying all
other action which needs to be taken during the succeeding 14 months in
order to maintain such title and the perfection of such security interests
(which the Lessee agrees timely to take); and (iii) stating that the Owner
Trustee is the owner of legal title to the Aircraft, and the Aircraft is
free and clear of all Liens, except the security interest created by the
Indenture and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate
existence except as permitted by Section 6.03(g) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise (i) that
it determines, in its reasonable, good faith business judgment, is no
longer necessary or desirable in the conduct of its business and (ii) the
loss of which will not materially adversely affect or diminish the rights
of the Holders.
(g) The Lessee shall not enter into any merger or consolidation,
or convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation
organized and existing under the laws of the United States or a political
subdivision thereof, (ii) is a Citizen of the United States, (iii) is a
U.S. Air Carrier, (iv) expressly assumes by an instrument in writing in
form and substance satisfactory to the Indenture Trustee, the Owner
Participant and the Owner Trustee all of the Lessee's obligations
hereunder and under the other Operative Agreements, and each other
document contemplated hereby or thereby and the Lessee delivers such
instrument to the Indenture Trustee, the Owner Participant and the Owner
Trustee, (v) provides an opinion from outside counsel to the Lessee which
counsel shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee and which opinion shall be reasonably satisfactory to
the Owner Participant and the Indenture Trustee, and an officer's
certificate, each stating that such merger, consolidation, conveyance,
transfer or lease and the instrument noted in clause (iv) above comply
with this Section 6.03(g), that such instrument is a legal, valid and
binding obligation of, and is enforceable against, such survivor or
Person, and that all conditions precedent herein provided for relating to
such trans- action have been complied with, and (vi) immediately after
such merger, consolidation or conveyance, transfer or lease, as the case
may be, the surviving company is in compliance with all of the terms and
conditions of this Agreement and the Lease and each other Operative
Agreement and each other document contemplated hereby or thereby; provided
that no such merger, consolidation or conveyance, transfer or lease shall
be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the
Lessee is merged or the Person to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Lessee under this Agreement and the Lease and each
other Operative Agreement and any other document contemplated hereby and
thereby to which the Lessee is a party with the same effect as if such
successor corporation had been named as the Lessee herein and therein. No
such conveyance, transfer or lease of all or substantially all of the
assets of the Lessee as an entirety shall have the effect of releasing the
Lessee or any successor corporation which shall theretofore have become
such in the manner prescribed in this Section 6.03(g) from its liability
hereunder or under the other Operative Agreements. Nothing contained
herein shall permit any lease, sublease, or other arrangement for the use,
operation or possession of the Aircraft except in compliance with the
applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant and the Indenture Trustee of any change in the address of its
chief executive office (as such term is used in Section 9-103(3) of the
Tennessee UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one
hundred twenty (120) days after the end of each fiscal year of
the Lessee, a consolidated balance sheet as of the end of such
fiscal year, and the related consolidated statements of income,
common stockholders' equity, retained earnings and cash flows of
the Lessee for the fiscal year then ended as prepared and
certified by the Lessee's independent certified public
accountants, including their opinion;
(B) within sixty (60) days after the end of the first,
second and third quarterly accounting periods in each fiscal year
of the Lessee, a consolidated balance sheet of the Lessee
prepared by it as of the close of the accounting period then
ended, together with the related consolidated statements of
income, retained earnings and cash flows for such accounting
period certified by the chief accounting officer or a financial
vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the
Lessee's Annual Reports on Form 10-K (including all corresponding
annual reports to shareholders), Quarterly Reports on Form 10-Q
and, if requested, any registration statement or prospectus filed
by the Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Lessee obtaining
actual knowledge of any condition or event which constitutes a
Default or any officer of the Lessee obtaining knowledge of any
condition or event which constitutes an Event of Default, an
officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is
taking or proposes to take with respect thereto; and
(F) from time to time, such other financial information as
the Lessor, the Owner Participant or the Indenture Trustee may
reasonably request.
Concurrently with the delivery of the financial statements
referred to in clause (A) above, the Lessee shall deliver to the Lessor, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee a
certificate of the Lessee, signed by any one of the President, the Chief
Financial Officer, the General Counsel, the Treasurer or the principal
accounting officer of the Lessee, stating that the signer, or an employee
reporting to same, is familiar with the relevant terms of this Agreement and
the Lease and the signer has reviewed, or has caused to be made under such
Person's supervision a review of, the activities of the Lessee and that, to the
best of his or her knowledge, there does not exist any Default or any Event of
Default or if a Default or an Event of Default exists or did exist, specifying
the nature thereof, the period of existence thereof and what action the Lessee
has taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the expiration or
other termination of this Agreement and the other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in
Lessor's Estate. (a) [Reserved.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust Agreement,
at all times be within its control and the foregoing representation shall not
limit the Owner Participant's right to transfer or sell such interests pursuant
to the terms of this Agreement. Neither the Owner Participant nor anyone else
authorized to act on its behalf has directly or indirectly offered any interest
in the Lessor's Estate or the Trust Agreement, or in any similar security, for
sale to, or solicited any offer to acquire any of the same from, anyone. The
Owner Participant further represents and warrants that neither it nor anyone
authorized to act on its behalf has made or will make any offer, solicitation
or sale of any interest in the Lessor's Estate or the Trust Agreement in
violation of the provisions of Section 5 of the Securities Act of 1933, as
amended. No representation in this Section 7.01(b) shall include any action or
inaction of the Lessee, First Chicago Leasing Corporation, the Subordination
Agent, the Underwriters or any Affiliate of any thereof whether or not
purportedly on behalf of the Owner Trustee, the Owner Participant or any of
their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants,
both in its individual capacity and as trustee, that neither it nor anyone
acting on its behalf (i)has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) except as contemplated in
Section 8.02(a) of the Indenture, shall own Certificates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to non-compliance
by the Lessee with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual
capacity, covenants that if at any time it shall have actual knowledge that it
has ceased to be a Citizen of the United States, it will resign immediately as
the Owner Trustee if such citizenship is necessary under the Transportation
Code as in effect at such time or, if it is not necessary under the
Transportation Code as in effect at such time, if it is informed in writing by
the Lessee, the Indenture Trustee or the Owner Participant that such lack of
United States citizenship would have any adverse effect on the Lessee, the
Indenture Trustee, the Holders or the Owner Participant. The Owner Trustee, in
its individual capacity, further covenants that if at any time it appears
reasonably probable that it will cease to be a Citizen of the United States
based on information that is (i) known to a Responsible Officer or (ii)
generally known to the public, it will promptly so notify, to the extent
permitted by law, all parties to this Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for
the benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and
the Owner Trustee, that if at any time when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely to cease to be, a Citizen of the United
States and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Transportation Code and
regulations then applicable thereunder, then the Owner Participant shall give
notice thereof to the Lessee and the Indenture Trustee and shall (at its own
expense and without any reimbursement or indemnification from the Lessee)
immediately (and in any event within a period of 15 days) (x) effect a voting
trust or other similar arrangement, (y) transfer in accordance with the terms
of this Agreement and the Trust Agreement all its rights, title and interest in
and to such Trust Agreement, the Lessor's Estate and this Agreement, or (z)
take any other alternative action that would prevent any deregistration, or
maintain the United States registration, of the Aircraft. It is agreed that
the Owner Participant shall be liable to pay promptly on request (A) to each of
the other parties hereto and to each Holder any damages actually suffered by
any such other party or Holder as the result of the representation and warranty
of the Owner Participant in the first sentence of Section 7.02(a) hereof
proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as a
result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under
the provisions of the first sentence of this Section 7.02(c).
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants as of the
Delivery Date that:
(i) it is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Kansas and it has
full power, authority and legal right to carry on its present business and
operations, to own or lease its Properties and to enter into and to carry
out the transactions contemplated by this Agreement, the Tax Indemnity
Agreement, the Trust Agreement and the other Operative Agreements to which
it is or is to be a party;
(ii) the execution, delivery and performance by it of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements to which it is or is to be a party have been duly
authorized by all necessary corporate action on its part and, assuming the
accuracy of the Lessee's representations in Section 6.01(o) hereof, do not
require any governmental approvals that would be required to be obtained
by the Owner Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii) and 6.02 hereof and compliance with
Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement and the other Operative Agreements to which
it is or is to be a party nor compliance with the terms and provisions
hereof or thereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under any law,
governmental rule or regulation applicable to the Owner Participant or the
charter documents, as amended, or bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the
imposition of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which it is or is to be a
party have been or on the Delivery Date will be duly executed and
delivered by the Owner Participant and constitute or on the Delivery Date
will constitute the legal, valid and binding obligation of the Owner
Participant enforceable against it in accordance with their terms except
as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(v) to the best of its knowledge, it is not in default under
any mortgage, deed of trust, indenture, lease or other instrument or
agreement to which the Owner Participant is a party or by which it or any
of its Properties may be bound, or in violation of any applicable law,
which default or violation would have a material adverse effect on the
financial condition, business or operations of the Owner Participant or an
adverse effect on the ability of the Owner Participant to perform its
obligations under this Agreement and the other Operative Agreements to
which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the
Operative Agreements to which it is or is to be a party, and the Owner
Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement or the other
Operative Agreements to which it is or is to be a party nor the
performance of its obligations hereunder or thereunder requires the
consent or approval of or the giving of notice to, the registration with,
or the taking of any other action in respect of, any governmental
authority or agency that would be required to be obtained or taken by the
Owner Participant except for filings contemplated by this Agreement;
(viii) no part of the funds to be used by it to acquire the
interests to be acquired by the Owner Participant under this Agreement
constitutes assets (within the meaning of ERISA and any applicable rules
and regulations) of any employee benefit plan subject to Title I of ERISA
or of any plan or individual retirement account subject to Section 4975 of
the Code; and
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30)
of the Code and, to the best of its knowledge, is not subject to tax as a
resident of another country.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee, other than such
laws, rules or regulations relating to the citizenship requirements of the
Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) and that there will not be any Lessor's Lien attributable
to it (or an Affiliate thereof) on the Delivery Date. The Owner Participant
agrees with and for the benefit of the Lessee, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee that the Owner Participant will, at its
own cost and expense, take such action as may be necessary (by bonding or
otherwise, so long as neither the Lessee's operation and use of the Aircraft
nor the validity and priority of the Lien of the Indenture is impaired) to duly
discharge and satisfy in full, promptly after the same first becomes known to
the Owner Participant, any Lessor's Lien attributable to the Owner Participant
(or an Affiliate thereof), provided, however, that the Owner Participant shall
not be required to discharge or satisfy such Lessor's Lien which is being
contested by the Owner Participant in good faith and by appropriate proceedings
so long as such proceedings do not involve any material danger of the sale,
forfeiture or loss of the Aircraft or the Lessor's Estate or the Trust
Indenture Estate or any interest in any thereof or otherwise materially
adversely affect the validity or priority of the Lien of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees
to indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may be
suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee as
the result of the failure of the Owner Participant to discharge and satisfy any
Lessor's Liens attributable to the Owner Participant (or an Affiliate thereof)
and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any of
its right, title or interest in and to the Operative Agreements or the Lessor's
Estate except in accordance with the provisions of Article 5 of the Trust
Agreement, as in effect on the date hereof or as amended in accordance with the
terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of SSB
and the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, SSB represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) as of the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America with its principal place of business and chief executive office
(as such terms are used in Article 9 of the UCC) at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration and has full corporate power and authority, in its
individual capacity or (assuming the Trust Agreement has been duly
authorized, executed and delivered by the Owner Participant) as the Owner
Trustee, as the case may be, to carry on its business as now conducted,
and to execute, deliver and perform this Agreement and the other Operative
Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by SSB, either in
its individual capacity or as the Owner Trustee, as the case may be, of
this Agreement and the Operative Agreements to which it is or is to be
party have been duly authorized by all necessary corporate action on its
part, and do not contravene its articles of association or by-laws; each
of this Agreement and the other Operative Agreements to which it is or is
to be a party has been duly authorized, executed and delivered by SSB,
either in its individual capacity or as the Owner Trustee, as the case may
be, and neither the execution and delivery thereof nor SSB's performance
of or compliance with any of the terms and provisions thereof will violate
any Federal or Connecticut law or regulation governing SSB's banking or
trust powers;
(iii) (A) assuming due authorization, execution and delivery by
each other party thereto, each of the Operative Agreements to which it is
or is to be party when duly executed and delivered will, to the extent
each such document is entered into by SSB in its individual capacity,
constitute the legal, valid and binding obligation of SSB in its
individual capacity enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law), and the performance by SSB in its
individual capacity of any of its obligations thereunder does not
contravene any lease, regulation or contractual restriction binding on SSB
in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law), and the performance by the Owner Trustee of any of
its obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened
actions or proceedings against SSB before any court or administrative
agency which would materially and adversely affect the ability of SSB,
either in its individual capacity or as the Owner Trustee, as the case may
be, to perform its obligations under the Operative Agreements to which it
is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the
Owner Participant at least thirty (30) days' prior written notice in the
event of any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of SSB in its individual capacity or any of its Affiliates the
consent or approval of or the giving of notice to, the registration with,
or the taking of any other action in respect of, any Federal or
Connecticut governmental authority or agency governing its banking or
trust powers;
(vii) on the Delivery Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by AVSA, the Aircraft
shall be free of Lessor's Liens attributable to SSB in its individual
capacity and SSB in its individual capacity is a Citizen of the United
States; and
(viii) the representations and warranties of the Owner Trustee
set forth in the Original Agreements to which it is a party were correct
on and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Lessor's Liens. SSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity and that there will not be any
such Lessor's Liens on the Delivery Date. The Owner Trustee, in its trust
capacity, and at the cost and expense of the Lessee, covenants that it will in
its trust capacity promptly, and in any event within 30 days after the same
shall first become known to it, take such action as may be necessary to
discharge duly any Lessor's Liens attributable to it in its trust capacity.
SSB, in its individual capacity, covenants and agrees that it will at its own
expense take such action as may be necessary to duly discharge and satisfy in
full, promptly, and in any event within 30 days after the same shall first
become known to it, any Lessor's Liens attributable to it in its individual
capacity which may arise at any time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. SSB, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the Indenture
Trustee, the Owner Participant, the Pass Through Trustee and the Owner Trustee
from and against any loss, cost, expense or damage which may be suffered by the
Lessee, the Indenture Trustee, the Owner Participant, the Pass Through Trustee
or the Owner Trustee as a result of the failure of SSB to discharge and satisfy
any Lessor's Liens attributable to it in its individual capacity, as described
in Section 7.04(b) hereof.
(d) Securities Act. None of SSB, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither SSB,
in its individual capacity, nor the Owner Trustee will take any action to
subject the Lessor's Estate or the trust established by the Trust Agreement, as
debtor, to the reorganization or liquidation provisions of the Bankruptcy Code
or any other applicable bankruptcy or insolvency statute.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as of the Delivery Date as
follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the other Operative
Agreements to which it is a party and to authenticate the Certificates
delivered on the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates delivered on the Certificate Closing Date, have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under, its articles of association or
by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is or is to be a party, has been duly
executed and delivered by it and, assuming that each such agreement is the
legal, valid and binding obligation of each other party thereto, is (or
will be, as the case may be), the legal, valid and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture
and this Agreement and the other Operative Agreements to which it is or is
to be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers;
(v) on the Delivery Date, the Indenture Trustee will hold the
original counterparts of the Lease, the Lease Supplement and the Ancillary
Agreement I; and
(vi) the representations and warranties of the Indenture Trustee
set forth in the Original Agreements to which it is a party were correct
on and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity and
that there will not be any Indenture Trustee's Liens as at and following the
Delivery Date, the Aircraft. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture
Trustee, in its individual capacity, agrees to indemnify and hold harmless the
Lessee, the Owner Participant, the Owner Trustee and the Pass Through Trustee
from and against any loss, cost, expense or damage which may be suffered by the
Lessee, the Indenture Trustee, the Owner Participant, the Owner Trustee or the
Pass Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The
Indenture Trustee agrees to give the Owner Participant notice of any Default
promptly upon a Responsible Officer of the Indenture Trustee having actual
knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release.
Section 7.08. Covenant of Quiet Enjoyment. Each of the Owner
Participant, the Indenture Trustee, the Pass Through Trustee and the Owner
Trustee covenants and agrees as to itself only that, so long as no Event of
Default under the Lease has occurred and is continuing, neither the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right quietly to
enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee as the case may be), provided, however, that the Lessor shall
not be liable for any act or omission of the Indenture Trustee or any other
Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and
Warranties. The Pass Through Trustee, in its individual capacity (except with
respect to clause (iii) below), represents and warrants as of the Delivery Date
that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
and the performance of its obligations hereunder have been fully
authorized by all necessary corporate action on its part, and neither the
execution and delivery hereof nor its performance of any of the terms and
provisions hereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its articles of association, or
bylaws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may be
bound or affected;
(iii) this Agreement has been duly executed and delivered by it
(in its individual and trust capacities) and, assuming that this Agreement
is the legal, valid and binding obligation of each other party thereto, is
or will be, as the case may be, the legal, valid and binding obligation of
the Pass Through Trustee (in its individual and trust capacities),
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(iv) the representations and warranties of the Pass Through
Trustee set forth in the Original Agreements to which it is a party were
correct on and as of the Certificate Closing Date (except to the extent
such representations expressly related solely to a specified earlier date,
in which case such warranties and representations were correct on and as
of such earlier date).
Section 7.10. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants of the Owner
Participant, the Owner Trustee (in its individual or trust capacity), the Pass
Through Trustee (in its individual or trust capacity), the Subordination Agent
(in its individual capacity or trust capacity) and the Indenture Trustee (in
its individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the delivery of
the Aircraft and the expiration or other termination of this Agreement, and the
other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a)
Subject to compliance by the Lessee with all of its obligations under the
Operative Agreements, each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Lessee covenants and agrees
that if the Lessee elects to terminate the Lease and to purchase the Aircraft
pursuant to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no
Event of Default shall have occurred and be continuing then, upon compliance
with the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as to
the absence of Lessor's Liens) but subject to the Lien of the Indenture, all of
the Owner Trustee's right, title and interest in and to the Aircraft, and if
the Lessee, in connection with such purchase, elects pursuant to Section
4.02(a)(A), (D), (E) or (F) of the Lease to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Certificates and hereunder, each of the parties shall execute and deliver
appropriate documentation permitting the Lessee to assume such obligations on
the basis of full recourse to the Lessee, maintaining for the benefit of the
Holders the security interest in the Aircraft created by the Indenture, and
upon compliance with the provisions of this Section7.11 releasing the Owner
Participant and the Owner Trustee from all obligations in respect of the
Certificates, the Indenture and all other Operative Agreements except any
obligations which shall have arisen (or with respect to events which shall have
occurred) prior to such assumption and take all such other actions as are
reasonably necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument
satisfactory in form and substance to the Indenture Trustee (A) pursuant
to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, to pay, satisfy and
discharge when and as due (at the stated maturity thereof, by acceleration
or otherwise) the principal of, Make-Whole Premium, if any, interest and
all other sums owing on all Outstanding Certificates (or on the Lessee's
substituted obligations) in accordance with their terms and to punctually
perform and observe all of the covenants and obligations hereunder and
under the Indenture and the Certificates (as the same may be amended in
connection with such assumption) to be performed or observed by the Owner
Trustee and (B)which contains amendments to the Indenture, in form and
substance satisfactory to the Indenture Trustee and the Holders, that
incorporate therein such provisions from the Lease and this Agreement as
may be appropriate, including, without limitation, events of default
substantially identical in scope and effect to those set forth in the
Lease and covenants substantially identical to the covenants of the Lessee
hereunder and under the Lease;
(ii) the instrument referred to in paragraph (i) of this
Section 7.11(b), any UCC financing statements relating thereto, and any
other documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of
the security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance
report dated the effective date of such assumption of an independent
insurance broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the
Lease (as it relates to the Indenture Trustee) relating to the insurance
with respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as
of the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate
from the Lessee that no Event of Default shall have occurred and be
continuing as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel
for the Lessee (who may be the Lessee's General Counsel) a legal opinion,
in form and substance satisfactory to the Indenture Trustee (w) with
respect to the compliance of the assumption contemplated hereby with the
terms, provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and
security interest in the Aircraft for the benefit of the Holders of the
Certificates (or the Lessee's substituted obligations) referred to in
paragraph (ii) of this Section 7.11(b) and (z) with respect to the
continued availability of the benefits of Section 1110 of the Bankruptcy
Code to the Indenture Trustee for the benefit of the Holders with respect
to the Aircraft after giving effect to such assumption, (B) from counsel
to the Indenture Trustee and Special Aviation Counsel, a legal opinion
comparable to the respective opinions delivered on the Delivery Date with
such changes therein as may be appropriate in light of such assumption,
and (C) in the case of each opinion described in clause (A) or (B) above,
covering such additional matters as the Indenture Trustee shall reasonably
request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee in connection with such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, SSB and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i)comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii)not take
any action, or cause any action to be taken, to amend, modify or supplement any
provision of the Trust Agreement in a manner that would adversely affect any
such party without the prior written consent of such party. The Owner Trustee
confirms for the benefit of the Lessee, the Indenture Trustee and the Pass
Through Trustee that it will comply with the provisions of Article 2 of the
Trust Agreement. Notwithstanding anything else to the contrary in the Trust
Agreement, so long as the Lease remains in effect, the Owner Participant agrees
not to terminate or revoke the trust created by the Trust Agreement without the
consent of the Lessee and (so long as the Indenture shall not have been
discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties
and Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the corporate power and authority to enter into and
perform its obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
and the performance of its obligations hereunder have been fully
authorized by all necessary corporate action on its part, and, neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its articles of association, or
bylaws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may be
bound or affected;
(iii) this Agreement has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent
imposed by the State of Utah or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities or the Intercreditor Agreement (other than franchise
or other taxes based on or measured by any fees or compensation received
by the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the Subordination
Agent imposed by the State of Utah or any political subdivision thereof in
connection with the acquisition, possession or ownership by the
Subordination Agent of any of the Certificates other than franchise or
other taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(v) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(vi) the Subordination Agent has not directly or indirectly
offered any Certificate for sale to any Person or solicited any offer to
acquire any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility;
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee; and
(viii) the representations and warranties of the Subordination
Agent set forth in the Original Agreements to which it is a party were
correct on and as of the Certificate Closing Date (except to the extent
such representations expressly related solely to a specified earlier date,
in which case such warranties and representations were correct on and as
of such earlier date).
(b) Covenants. (i) The Subordination Agent agrees not to amend
any Liquidity Facility without the consent of the Lessee (so long as no Event
of Default shall have occurred and be continuing) and of the Owner Participant
(such consents not to be unreasonably withheld).
(ii) In connection with the deposit in the applicable Cash
Account of amounts drawn pursuant to any Downgrade Drawing under a Liquidity
Facility, the Subordination Agent agrees, so long as no Event of Default shall
have occurred and be continuing, to pay to the Lessee promptly following each
Regular Distribution Date any Investment Earnings on the amount so deposited
which remain after application of such Investment Earnings pursuant to Section
2.06 of such Liquidity Facility to the interest payable on such Downgrade
Drawing under Section 3.07 of such Liquidity Facility. Capitalized terms used
in this Section shall have the meanings specified in the Intercreditor
Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally.
The Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with
any assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), by any Federal, state or local government
or taxing authority in the United States, or by any government or taxing
authority of a foreign country or of any political subdivision or taxing
authority thereof or by a territory or possession of the United States or an
international taxing authority, upon or with respect to, based upon or measured
by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing,
control, purchase, registration, reregistration, repossession,
improvement, maintenance, redelivery, manufacture, acquisition, purchase,
financing, mortgaging, ownership, acceptance, rejection, delivery,
non-delivery, leasing, subleasing, transport, insuring, inspection,
registration, assembly, abandonment, preparation, installment, possession,
use, operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition,
replacement, assignment, overhaul, transfer of registration or
registration, imposition of any lien, sale or other disposition of the
Aircraft, Airframe, any Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition
of the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received
with respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the
Indenture Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the
transactions described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement;
or
(ix) any assumption by the Lessee pursuant to Section 7.11 of
this Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a)
shall not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured
by or with respect to the net or gross income, items of tax preference or
minimum tax or excess profits, receipts, value added (but only to the
extent such value added tax is in the nature of an income tax), capital,
franchise, net worth or conduct of business or other similarly-based Taxes
of such Indemnitee (other than any Taxes in the nature of sales, use,
transfer, excise, rental, license, ad valorem, property or other similarly
based Taxes) (the "Income Taxes"); provided, however that the provisions
of this paragraph (b)(i) shall not exclude from the indemnity described in
Section 8.01(a) hereof, any Income Taxes to the extent such Income Taxes
are imposed by any jurisdiction in which the Indemnitee would not be
subject to such type of Income Taxes but for, or would be subject to such
type of Income Taxes solely as a result of, (x) the operation,
registration, location, presence, or use of the Aircraft, Airframe, any
Engine or any Part thereof, in such jurisdiction or (y) the place of
incorporation or principal office or the activities of the Lessee or any
sublessee in such jurisdiction (it being understood that any such
indemnity would be payable only to the extent of the net harm incurred by
the Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax juris- diction resulting from payment
of such Income Taxes); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements, otherwise required to be made on
an After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the
last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions,
events or periods of time (or any combination of the foregoing) which
occur after (and are not attributable to acts, omissions or events
occurring contemporaneously with or prior to) (A) the payment in full of
all amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Certificates in the case of the Indenture
Trustee or the Trust Indenture Estate if the Lessee shall have assumed the
Certificates pursuant to Section 7.11 of this Agreement), and (B) the
earliest of (x) the expiration of the Term of the Lease and return of the
Aircraft in accordance with Article 12 of the Lease, (y) the termination
of the Lease in accordance with the applicable provisions of the Lease and
return of the Aircraft in accordance with the Lease, or (z) the
termination of the Lease in accordance with the applicable provisions of
the Lease and the transfer of all right, title and interest in the
Aircraft to the Lessee pursuant to its exercise of any of its purchase
options set forth in Section 4.02(a) of the Lease, except that,
notwithstanding anything in this Section 8.01(b) to the contrary, Taxes
incurred in connection with the exercise of any remedies pursuant to
Article 17 of the Lease following the occurrence of an Event of Default
shall not be excluded from the indemnity described in Section 8.01(a)
hereof;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been
imposed but for the willful misconduct or gross negligence of such
Indemnitee (other than gross negligence or willful misconduct not actually
committed by but instead imputed to such Indemnitee by reason of such
Indemnitee's participation in the transactions contemplated by the
Operative Agreements) or the breach by such Indemnitee of any
representation, warranty or covenant contained in the Operative Agreements
or any document delivered in connection therewith (unless attributable to
a breach of representation, warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner
Participant or any successor, assign or Affiliate thereof which became
payable by reason of any voluntary or involuntary transfer or disposition
by such Indemnitee subsequent to the Delivery Date, including revocation
of the Trust, of any interest in some or all of the Aircraft, Airframe,
Engines or Parts thereof or its interest in the Lessor's Estate, other
than (A) Taxes that result from transfers or dispositions which occur
while an Event of Default under the Lease has occurred and is continuing
at the time of such transfer or disposition or (B) Taxes that result from
any transfer or disposition pursuant to the terms of the Lease;
(vii) Taxes imposed on the Owner Participant for which the
Lessee is obligated to indemnify the Owner Participant pursuant to the Tax
Indemnity Agreement;
(viii) Notwithstanding anything herein to the contrary, Taxes
imposed on a successor, assign or other transferee (including, without
limitation, a transferee which is a new lending office of an original
Indemnitee) of any entity or Person which on the Delivery Date is an
Indemnitee (for purposes of this clause (viii), an "original Indemnitee")
or such original Indemnitee to the extent that such Taxes exceed the
amount of Taxes that would have been imposed and would have been
indemnifiable pursuant to Section 8.01(a) hereof had there not been a
succession, assignment or other transfer by such original Indemnitee of
any such interest of such Indemnitee in the Aircraft or any Part thereof,
any interest in or under any Operative Agreement, or any proceeds
thereunder (it being understood that for purposes of determining the
amount of indemnification that would have been due to such original
Indemnitee with respect to a net income Tax, it shall be assumed that such
original Indemnitee would be subject to taxation on its income at the
highest marginal statutory rate applicable to it); provided, however, that
the exclusion provided by this clause (viii) shall not apply in the case
of a succession, assignment or other transfer (1) while an Event of
Default under the Lease or the Indenture has occurred and is continuing;
(2) required by any provision of the Operative Agreements (other than
pursuant to Section 7.02 hereof) or (3) in the case of the Owner
Participant, to any Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(xi) any Taxes which would not have been imposed but for a
Lessor's Lien with respect to the Owner Participant or an Indenture
Trustee's Lien with respect to the Indenture Trustee;
(xii) any Taxes imposed on the Owner Participant or any person
who is a "disqualified person", within the meaning of Section 4975(e)(2)
of the Code, or a "party in interest", within the meaning of Section 3(14)
of ERISA, by virtue of such person's relationship to the Owner Participant
as the result of any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code, occurring with respect to
the purchase or holding of any Pass Through Certificate (or any funded
participation therein) (i) over which purchase or holding the Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), or (ii) by an
employee benefit plan, within the meaning of Section 3(3) of ERISA, or
individual retirement account or plan subject to Section 4975 of the Code
with respect to which the Owner Participant (or any Affiliate thereof) has
the power, directly or indirectly, to appoint or terminate, or to
negotiate the terms of the management agreement with, the person or
persons having discretion or control (other than in the capacity of a
directed trustee or custodian), over such purchase or holding; and
(xiii) Taxes imposed by any jurisdiction to the extent they
would have been imposed on the Lessor or the Owner Participant for
activities in such jurisdiction unrelated to the transactions contemplated
by the Operative Agreements.
(c) Withholding. The Pass Through Trustee shall withhold any
Taxes required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder of
a Pass Through Certificate has furnished evidence to the Pass Through Trustee
sufficient under applicable law to entitle such holder of a Pass Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or
the Pass Through Trustee fails to withhold a Tax required to be withheld with
respect to any Holder of a Certificate or any holder of a Pass Through
Certificate or any claim is otherwise asserted by a taxing authority against
the Owner Trustee or the Owner Participant for any withholding tax, the Lessee
will indemnify the Owner Trustee and the Owner Participant (without regard to
the exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis
against any such Taxes required to be withheld and any interest and penalties
with respect thereto, along with any other costs (including reasonable
attorney's fees) incurred in connection with any such claim. The Indenture
Trustee or the Pass Through Trustee, as the case may be, in its individual
capacity (and without recourse to the Trust Indenture Estate), shall indemnify
the Lessee (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis for any payment the Lessee shall have made
pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee
shall be required to pay with respect to any Tax indemnified against under
Section 8.01 shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Tax not been incurred. If any Indemnitee actually realizes a permanent tax
benefit by reason of the payment of any Tax paid or indemnified against by the
Lessee, such Indemnitee shall promptly pay to the Lessee to the extent such tax
benefit was not previously taken into account in computing such payment, but
not before the Lessee shall have made all payments then due to such Indemnitee
under this Agreement, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such permanent tax
benefit plus any other permanent tax benefit actually realized by such
Indemnitee that would not have been realized but for any payment made by such
Indemnitee pursuant to this sentence and not already paid to the Lessee, and
(y) the amount of the payment made under this Section 8.02 and Section 8.01
hereof by the Lessee to such Indemnitee plus the amount of any other payments
by the Lessee to such Indemnitee theretofore required to be made under this
Section 8.02 and Section 8.01 hereof (and the excess, if any, of the amount
described in clause (x) above over the amount described in clause (y) above
shall be carried forward and applied to reduce pro tanto any subsequent
obligations of the Lessee to make payments pursuant to Section 8.01 hereof);
provided, however, that notwithstanding the foregoing portions of this
sentence, such Indemnitee shall not be obligated to make any payment to the
Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is disallowed or reduced in a taxable year subsequent to the
year of such payment (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an
Indemnitee pursuant to this Article 8 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable, provided that in the case of
amounts which are being contested by the Lessee in good faith or by the
Indemnitee in either case pursuant to Section 8.04 hereof, such amount shall be
payable 30 days after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice
in writing of such claim and shall furnish the Lessee with copies of any
requests for information from any taxing authority relating to such Taxes with
respect to which the Lessee may be required to indemnify hereunder; provided,
however, that the failure of an Indemnitee to give such notice or furnish such
copy shall not terminate any of the rights of such Indemnitee under this
Article 8, except to the extent that the Lessee's contest rights have been
materially and adversely impaired by the failure to provide such notice. The
Indemnitee shall in good faith, with due diligence and at the Lessee's expense,
if timely requested in writing by the Lessee, contest (or, at the Indemnitee's
option, require the Lessee to contest in the name of the Lessee, if permitted
by law) the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or
not paying the same except under protest if protest is necessary and
proper in each case so long as non-payment will not result in a material
risk of the sale, forfeiture or loss of, or the creation of a Lien other
than a Lessor's Lien on the Aircraft, Airframe or any Engine or any risk
of criminal liability; or
(ii) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial
proceedings.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such Indemnitee
shall determine the manner in which to contest such Taxes, and shall
periodically or upon the Lessee's request advise the Lessee of the progress of
such contest; provided, however, that if the Indemnitee determines in its sole
discretion that such participation will not adversely affect such Indemnitee's
contest of any Taxes not indemnified hereunder, the Lessee shall have the right
to participate in such contest, including, among other rights, the right to
attend governmental or judicial conferences (to the extent unrelated issues are
not discussed) concerning such claim and the right to review and approve all
submissions to any governmental or other authority insofar as they relate to
the Tax for which indemnification is sought. Notwithstanding the preceding
sentences of this Section 8.04, such Indemnitee shall not be required to take
or continue any action unless the Lessee shall have (i) agreed in writing to
pay and shall pay the Indemnitee on demand and on an After-Tax Basis for any
liability or reasonable expense which such Indemnitee may incur as a result of
contesting such Taxes including without limitation (y) reasonable attorneys'
and accountants' fees and (z) the amount of any interest, penalty or additions
to tax which may ultimately be payable as the result of contesting such Taxes,
(ii) delivered to the Indemnitee a written acknowledgment of the Lessee's
obligation to such Indemnitee pursuant to this Agreement to the extent that the
contest is not successful and of the inapplicability of any exclusion or
defenses thereto, provided, however, that such acknowledgement shall not
preclude the Lessee from raising defenses to liability under this Agreement if
a decision in such contest is rendered which clearly articulates the cause of
such Tax and the cause, as so articulated, is not one for which the Lessee is
responsible to pay an indemnity hereunder, (iii) made all payments and
indemnities (other than contested payments and indemnities) then due to the
Indemnitee hereunder or with respect to any of the transactions contemplated by
or under the Operative Agreements. In no event shall such Indemnitee be
required or the Lessee permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received an opinion
of independent tax counsel, at the Lessee's expense, selected by such
Indemnitee and reasonably satisfactory to the Lessee ("Tax Counsel") to the
effect that a reasonable basis exists for contesting such claim, (ii) such
Indemnitee shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if an Event of Default shall have occurred and be continuing, the
Lessee shall have provided security for its obligations hereunder reasonably
satisfactory to the Indemnitee, (iv) if such contest shall be conducted in a
manner requiring payment of the claim in advance, the Lessee shall have
advanced sufficient funds, on an interest free basis, to make the payment
required, and agreed to indemnify the Indemnitee against any additional net
adverse tax consequences on an After-Tax Basis to such Indemnitee of such
advance and (v) the issue shall not be the same as an issue previously
contested hereunder and decided adversely, unless the Indemnitee shall have
received, at the Lessee's sole expense, a written opinion, in form and
substance reasonably satisfactory to such Indemnitee, of Tax Counsel, to the
effect that the applicable circumstances or law has changed and, in light
thereof, there is substantial authority within the meaning of Section 6662(d)
of the Code, as interpreted by the Treasury regulations thereunder, or under
similar principles of state or foreign law (as the case may be) for contesting
such claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee is
at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
Nothing contained in this Section 8.04 shall require any
Indemnitee to contest or continue to contest, or permit Lessee to contest, a
claim which such Indemnitee would otherwise be required to contest pursuant to
this Section 8.04, if such Indemnitee shall waive payment by Lessee of any
amount that might otherwise be payable by Lessee under this Article 8 in
connection with such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a
refund of all or any part of any Taxes which the Lessee shall have paid for
such Indemnitee or for which the Lessee shall have reimbursed or indemnified
such Indemnitee, and provided there shall not have occurred and be continuing
any Event of Default by the Lessee hereunder or under the Lease (in which case
payment shall not be made to the Lessee until such Event of Default shall have
been cured), such Indemnitee shall pay to the Lessee an amount equal to the
amount of such refund less (x) reasonable expenses not previously reimbursed,
(y) all payments then due to such Indemnitee under this Article 8 and (z) Taxes
imposed with respect to the accrual or receipt thereof, including interest
received attributable thereto, plus any tax benefit actually realized by such
Indemnitee as a result of any payment by such Indemnitee made pursuant to this
sentence; provided, however, that such amount shall not be payable (a) before
such time as the Lessee shall have made all payments or indemnities then due
and payable to such Indemnitee under this Article 8 and (b) to the extent that
the amount of such payment would exceed (i) the amount of all prior payments by
the Lessee to such Indemnitee pursuant to this Article 8 less (ii) the amount
of all prior payments by such Indemnitee to the Lessee pursuant to this Article
8.
Any subsequent loss of such refund or tax benefit shall be
treated as a Tax subject to indemnification under the provisions of this
Article 8 (in the case of any such tax benefit, without regard to Section
8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any obligation of the Lessee under this
Article 8 (other than any report or return relating to Income Taxes), the
Lessee shall make such report or return if legally permitted to do so, except
for any such report or return that the Indemnitee has notified the Lessee that
it intends to file, in such manner as will show the ownership of the Aircraft
in the Owner Trustee and shall send a copy of the applicable portions of such
report or return to the Indemnitee and the Owner Trustee or will notify the
Indemnitee of such requirement and make such report or return in such manner as
shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee
will provide such information reasonably available to the Lessee as the
Indemnitee may reasonably require from the Lessee to enable the Indemnitee to
fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements (without duplication of the
requirements of Section 3 of the Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Indemnitee will provide
such information reasonably available to it as the Lessee may reasonably
require from such Indemnitee to enable the Lessee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements and any audit information request arising from such filing; provided
that in no event shall any Indemnitee be required to provide copies of any of
its tax returns. The Lessee shall hold the Indemnitee harmless from and against
any liabilities, including penalties, additions to tax, fines and interest,
imposed upon or incurred by such Indemnitee to the extent directly attributable
to any insufficiency or inaccuracy in any return, statement, or report prepared
by the Lessee or information supplied by the Lessee, or directly attributable
to the Lessee's failure to supply reasonably available information to such
Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax
otherwise indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly to
the relevant Taxing authority and file any returns or reports required with
respect thereto; provided, however, that the Lessee shall not make any
statements or take any action which would indicate that the Lessee or any
Person other than the Owner Trustee or the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each payment
by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. If, for
any reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to such Indemnitee, then such Indemnitee shall pay to the Lessee within
30 days of the Lessee's demand therefor an amount which equals the amount
actually paid by the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify
each Indemnitee against and agrees to protect, defend, save and keep harmless
each Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall together
with interest thereon to the extent permitted by law at the Debt Rate until
such shortfall is paid in full), penalties, claims, actions, suits, costs,
disbursements and expenses (including reasonable legal fees and expenses and
all costs and expenses relating to amendments, supplements, adjustments,
consents, refinancings and waivers under the Operative Agreements except as
otherwise provided in Section 10.01(c)(i) or Article 15 hereof) of every kind
and nature (whether or not any of the transactions contemplated by this
Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Pass Through Agreement, the Trust Agreement, the
Intercreditor Agreement, the Liquidity Facilities, AVSA's FAA Bill of
Sale, AVSA's Warranty Bill of Sale or any other Operative Agreement or any
other document entered into in connection herewith or any sublease or
transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, repair or testing of
the Aircraft, Airframe, or any Engine or any engine used in connection
with the Airframe, or any part thereof by the Lessee, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims relating to any laws, rules or regulations, including, without
limitation, environmental control, noise and pollution laws, rules or
regulation;
(iii) the manufacture, design, sale, return, purchase,
acceptance, rejection, delivery, non-delivery, condition, repair,
modification, servicing, rebuilding, airworthiness, registration,
reregistration, import, export, performance, non-performance, lease,
sublease, transfer, merchantability, fitness for use, alteration,
substitution or replacement of any Airframe, Engine, or Part under the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the GTA
or the Engine Warranty Assignment or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark
or copyright infringement;
(iv) any breach of or failure to perform or observe, or any
other non-compliance with, any condition, covenant or agreement to be
performed, or other obligations of the Lessee under any of the Operative
Agreements or the Original Agreements, or the falsity or inaccuracy of any
representation or warranty of the Lessee in any of the Operative
Agreements or the Original Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements
or the Original Agreements and the administration of the Trust Indenture
Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate
or any Pass Through Certificate, or any refunding or refinancing thereof,
or interest in the Lessor's Estate or the Trust Agreement or the Original
Trust Agreement or any similar interest or in any way relating to or
arising out of the Trust Agreement or the Original Trust Agreement and the
Lessor's Estate, the Indenture or the Original Indenture or the Trust
Indenture Estate (including, without limitation, any claim arising out of
the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, or any other federal or state statute, law or
regulation, or at common law or otherwise relating to securities), or the
action or inaction of the Owner Trustee or Indenture Trustee as trustees,
in the manner contemplated by this Agreement, the Original Participation
Agreement, the Indenture, the Original Indenture, the Indenture and
Security Agreement Supplement, the Trust Agreement or the Original Trust
Agreement and in the case of the Owner Participant or the Initial Owner
Participant, as the case may be, its obligations arising under Section
6.01 of the Trust Agreement or the Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a result
of their respective ownership or leasing of any interest in the Aircraft,
Airframe, any Engine or Part during the Term, whether or not in the Lessee's
possession or control, insofar as such Expense relates to any activity or event
whatsoever involving such item while it is under lease to the Lessee (or after
termination of the Lease in connection with the exercise of remedies thereunder
to the extent that such Expense is attributable to the transactions
contemplated hereby and by the other Operative Agreements and the Original
Agreements), and such Expense does not fall within any of the exceptions listed
in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a)
shall not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or
gross negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to
acts or events which occur after the Aircraft is no longer part of the
Lessor's Estate or leased under the Lease or, if the Aircraft remains a
part of the Lessor's Estate, after the expiration of the Term and any
holdover period under Section 12.05 of the Lease (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor or the Indenture
Trustee shall be entitled to exercise remedies under such Article 17), or
to acts or events which occur after return of possession of the Aircraft
by the Lessee in accordance with the provisions of the Lease but in any
such case only to the extent not fairly attributable to acts or omissions
of the Lessee prior to expiration of the Term and any holdover period
under Section 12.05 of the Lease, including without limitation the
Lessee's failure to fully discharge all of its obligations under the Lease
or the other Operative Agreements or the Original Agreements;
(iii) is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (other than the Owner
Participant's obligations under Section 6.01 of the Trust Agreement) and
for which the Lessee is not otherwise obligated to reimburse the Owner
Participant, directly or indirectly;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default of any of the foregoing by the Lessee or another
Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to
the extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
and in the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) is in the case of the Owner Participant or the Owner
Trustee, to the extent attributable to the offer or sale by such
Indemnitee after the Delivery Date of any interest in the Aircraft, the
Lessor's Estate or the Trust Agreement or any similar interest (including
an offer or sale resulting from bankruptcy or other proceedings for the
relief of debtors in which such Indemnitee is the debtor), unless in each
case such offer or sale shall occur (w) in connection with a Refinancing,
(x) as a result of exercise of remedies under Article 17 of the Lease, (y)
during a period when an Event of Loss has occurred or (z) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to the Lease; or
(ix) which is incurred by the Owner Participant or any person
who is a "disqualified person", within the meaning of Section 4975(e)(2)
of the Code, or a "party in interest", within the meaning of Section 3(14)
of ERISA, by virtue of such person's relationship to the Owner
Participant, as the result of any prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code,
occurring with respect to the purchase or holding of any Pass Through
Certificate (i) over which purchase or holding the Owner Participant or
any Affiliate thereof has discretion or control (other than in the
capacity of a directed trustee or custodian), or (ii) by an employee
benefit plan, within the meaning of Section 3(3) of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code with
respect to which the Owner Participant (or any Affiliate thereof) has the
power, directly or indirectly, to appoint or terminate, or to negotiate
the terms of the management agreement with, the person or persons having
discretion or control (other than in the capacity of a directed trustee or
custodian), over such purchase or holding.
Section 9.02. After-Tax Basis. The amount which the Lessee
shall be required to pay with respect to any Expense indemnified against under
Section 9.01 hereof shall be an amount sufficient to restore the Indemnitee, on
an After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent Tax
benefit by reason of the payment of such Expense paid or indemnified against by
the Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made all
payments theretofore due such Indemnitee under this Agreement, the Original
Agreements, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence and (y) the amount of
such payment pursuant to this Section 9.02 by the Lessee to such Indemnitee
plus the amount of any other payments by the Lessee to such Indemnitee
theretofore made pursuant to this Section 9.02 less the amount of any payments
by such Indemnitee to the Lessee theretofore made pursuant to this Section 9.02
(and the excess, if any, of the amount described in clause (x) above over the
amount described in clause (y) above shall be carried forward and applied to
reduce pro tanto any subsequent obligations of the Lessee to make payments
pursuant to this Section 9.02), it being intended that no Indemnitee should
realize a net Tax benefit pursuant to this Section 9.02 unless the Lessee shall
first have been made whole for any payments by it to such Indemnitee pursuant
to this Section 9.02; provided, however, that notwithstanding the foregoing
portions of this sentence, such Indemnitee shall not be obligated to make any
payment to the Lessee pursuant to this sentence so long as an Event of Default
shall have occurred and be continuing. Any Taxes that are imposed on any
Indemnitee as a result of the disallowance or reduction of such Tax benefit
referred to in the next preceding sentence in a taxable year subsequent to the
year of allowance and utilization by such Indemnitee (including the expiration
of any tax credit carryovers or carrybacks of such Indemnitee that would not
otherwise have expired) shall be indemnifiable pursuant to the provisions of
Section 8.01 hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the
Lessee shall be subrogated to any right of the Indemnitee, other than with
respect to any of such Indemnitee's insurance policies or in connection with
any indemnity claim the Person indemnified may have against any other
Indemnitee in respect of the matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the
Lessee shall give prompt written notice one to the other of any liability of
which such party has knowledge for which the Lessee is, or may be, liable under
this Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a
recovery of all or any part of any amount which the Lessee shall have paid to
such Indemnitee or for which the Lessee shall have reimbursed such Indemnitee
under this Article 9, and provided there shall not have occurred a Payment
Default or an Event of Default (in which case payment shall not be made to the
Lessee until such Payment Default or Event of Default shall have been cured)
such Indemnitee shall pay to the Lessee the amount of any such recovery,
including interest received with respect to the recovery, net of any Taxes paid
or payable as a result of the receipt of the recovery and interest, plus any
net additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to such
Indemnitee under this Article 9 or (b) to the extent that the amount of such
payment would exceed the amount of all prior payments by the Lessee to such
Indemnitee pursuant to this Article 9, less the amount of all prior payments by
such Indemnitee to the Lessee pursuant to this Article 9. Any subsequent loss
of such recovery or tax benefit shall be subject to indemnification under
Article 8 or this Article 9, as the case may be.
Section 9.06. Defense of Claims. The Lessee or its insurers
shall have the right (in each such case at the Lessee's sole expense) to
investigate or, provided that (i) the Lessee or its insurers shall not reserve
the right to dispute liability with respect to any insurance policies pursuant
to which coverage is sought, (ii) in the case of the Lessee, no Event of
Default shall have occurred and be continuing and (iii) the Lessee shall have
first acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and such
participation shall not constitute a waiver of the indemnification provided in
this Section 9.06. No Indemnitee shall enter into any settlement or other
compromise with respect to any claim described in this Section 9.06 without the
prior written consent of the Lessee, which consent shall not unreasonably be
withheld or delayed, unless such Indemnitee waives its right to be indemnified
under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities, only with respect to losses,
liabilities, obligations, damages, penalties, claims, actions, suits, costs,
Expenses and disbursements caused by events occurring or existing (or fairly
attributable to the Lessee's acts or omissions) prior to or incurred in the
process of (i) the return or disposition of the Aircraft under Article12 or
Article17 of the Lease, or (ii) the termination of the Lease or the Indenture
or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's
obligations under the indemnities provided for in this Agreement shall be those
of a primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee without
first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee
on demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a)
Transaction Costs. The Owner Participant shall pay (or reimburse the Lessee if
the Lessee shall have previously made such payment) all fees and expenses of
the following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby: (i) the fees and expenses of counsel for the
Owner Participant and the Owner Participant Guarantor; (ii) the fees and
expenses of the transaction documentation counsel for the Lessee and counsel
for the Owner Trustee, the Indenture Trustee, the Subordination Agent, the Pass
Through Trustee, each Liquidity Provider, the LC Bank and the Underwriters
(other than those fees, expenses and disbursements payable by the Underwriters
pursuant to the Underwriting Agreement); (iii) the fees and expenses of
Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses of the Pass
Through Trustee and each Liquidity Provider and the fees and expenses of the
Owner Trustee, the Subordination Agent, the LC Bank and the Indenture Trustee
including, without limitation, in connection with the issuance of the Letter of
Credit; (v) any compensation, commissions and discounts payable to the
Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if any,
incurred in printing the Pass Through Certificates; (vii) the fees and expenses
incurred in connection with printing the Registration Statement on Form S-3
bearing Registration No. 333-49411 (including any amendment thereto), printing
any Preliminary Prospectus or Prospectus (as such terms are defined in the
Underwriting Agreement) for the offering of the Pass Through Certificates;
(viii) the fees and expenses of Arthur Andersen LLP; (ix) the fees and expenses
of Moody's and S&P; (x) the fees and expenses (including computer time- sharing
charges) of First Chicago Leasing Corporation; (xi) the reasonable
out-of-pocket expenses of the Owner Participant and the Owner Participant
Guarantor, including, without limitation, any amounts paid in connection with
any appraisal report prepared on behalf of the Owner Participant; (xii)
reimbursement to the Owner Participant, the Owner Participant Guarantor, the
Owner Trustee, the Indenture Trustee, the Subordination Agent, each Liquidity
Provider, the LC Bank and the Pass Through Trustee for any and all fees,
expenses and disbursements of the character referred to above or otherwise
incurred in connection with the negotiation, preparation, execution and
delivery, filing and recording of the Operative Agreements and the documents
contemplated thereby, including, without limitation, travel expenses and
disbursements which shall have been paid by such party; (xiii) printing and
duplicating expenses and all fees, taxes and other charges payable in
connection with the recording or filing on or before the Delivery Date of the
instruments described in this Agreement; (xiv) initial fees, initial expenses,
initial disbursements and the initial costs of distributing the Certificates
(but not the continuing fees, expenses, disbursements and costs of
distribution) of SSB, as lessor under the Lease and as Owner Trustee under the
Trust Agreement and with respect to the administration of the Lease and the
Lessor's Estate, of the Indenture Trustee as trustee under the Indenture with
respect to the administration of the Trust Indenture Estate and of the
Subordination Agent acting under the Intercreditor Agreement; and (xv) any
other amounts approved by the Lessee and the Owner Participant. The fees and
expenses described in clauses (ii) through (x) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee
acknowledge that the percentages for Basic Rent, Stipulated Loss Value and
Termination Value set forth in the Lease have been prepared assuming the
aggregate amount payable by the Owner Participant pursuant to the preceding
paragraph is 1.287% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 3.04 hereof, and (iii) the Transaction Costs to
be paid by the Owner Participant pursuant to Section 10.01 hereof exceed, in
the aggregate, $22,100,000, unless otherwise agreed by the Owner Participant.
To the extent that the payment by the Owner Participant of Transaction Costs
would cause the sum described in the immediately preceding sentence to exceed
$22,100,000, the Lessee shall be obligated to pay the Transaction Costs
constituting the First Chicago Leasing Corporation fee and the Davis Polk &
Wardwell fee to the extent of such excess and the Owner Participant shall have
no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, the continuing fees, expenses and disbursements (including reasonable
counsel fees and initial fees relating to the establishment of a replacement
trustee) of the Pass Through Trustee and the Subordination Agent and the
continuing fees, expenses and disbursements (including reasonable counsel fees
and initial fees relating to the establishment of a replacement liquidity
provider) of the Liquidity Providers under each Liquidity Facility shall be
paid as Supplemental Rent by the Lessee, including without limitation any
amounts payable to the Indenture Trustee or on account of requests by the
Indenture Trustee for indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation
of the foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Owner Participant Guarantor, the Indenture Trustee, the
Subordination Agent, the Liquidity Providers and the Pass Through Trustee
all costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with (a) any Default or Event of
Default and any enforcement or collection proceedings resulting therefrom,
or (b) the enforcement of the obligations of the Lessee hereunder or under
the other Operative Agreements and the enforce- ment of this Section
10.01, including, without limitation, the entering into or giving or
withholding of any amendments or supplements or waivers or consents,
including without limitation, any amendment, supplement, waiver or consent
resulting from any work-out, restructuring or similar proceeding relating
to the performance or nonperformance by the Lessee of its obligations
under the Operative Agreements or (c) any amendment, supplement, waiver or
consent (whether or not entered into) under the Original Agreements, this
Agreement, the Lease, the Indenture, the Certificates, the Tax Indemnity
Agreement, the Purchase Agreement Assignment or any other Operative
Agreement or document or instrument delivered pursuant to any of them,
which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided, however,
that the Lessee shall not be responsible for fees and expenses incurred in
connection with the offer, sale or other transfer (whether pursuant to
Article 5 of the Trust Agreement or otherwise) by the Owner Participant or
the Owner Trustee after the Delivery Date of any interest in the Aircraft,
the Lessor's Estate or the Trust Agreement or any similar interest (and
the Owner Participant shall be responsible for all such fees and
expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers
involved in an independent appraisal of the Aircraft to the extent
required under Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of
a successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in
violation of the Transportation Code or any applicable rule or regulation
of the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement
or agreements, in form and substance satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby
such successor Owner Trustee confirms that it shall be deemed a party to
this Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Purchase Agreement Assignment, the Engine Warranty Assignment, the
Indenture, the Indenture Supplement and any other Operative Agreement to
which the Owner Trustee is a party and agrees to be bound by all the terms
of such documents applicable to the Owner Trustee and makes the
representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of UCC financing and continuation statements,
filings in accordance with the Transportation Code and amendments thereto
shall be made and all further actions taken in connection with such
appointment as may be necessary in connection with maintaining the
validity, perfection and priority of the Lien of the Indenture and the
valid and continued registration of the Aircraft in accordance with the
Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint promptly
a successor Owner Trustee meeting the requirements of Section 11.01(b) hereof
in the event the Owner Participant has knowledge that the Owner Trustee at any
time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, AVSA's FAA Bill of Sale, AVSA's
Warranty Bill of Sale, the Lease or any other Operative Agreement to which the
Owner Participant is a party and the Owner Participant shall not be liable for
the performance by any party hereto of such other party's obligations or duties
hereunder. Under no circumstances shall the Owner Participant as such be
liable to the Lessee, nor shall the Owner Participant be liable to any Holder,
for any action or inaction on the part of the Owner Trustee or the Indenture
Trustee in connection with this Agreement, the Indenture, the Lease, the Trust
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
any other Operative Agreement, any Original Agreement, the ownership of the
Aircraft, the administration of the Lessor's Estate or the Trust Indenture
Estate or otherwise, whether or not such action or inaction is caused by the
willful misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of
a Certificate shall have no further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, the Indenture, the Intercreditor Agreement and the Liquidity
Facilities and to all of the terms of said documents, and the Lessee
acknowledges receipt of an executed counterpart of such documents; it being
agreed that such consent shall not be construed to require the Lessee's consent
to any future supplement to, or amendment, waiver or modification of, the terms
of the Trust Agreement, the Indenture, the Intercreditor Agreement, the
Liquidity Facilities or the Certificates, except that prior to the occurrence
and continuance of an Event of Default, no section of the Indenture, the Trust
Agreement, the Intercreditor Agreement or the Liquidity Facilities shall be
amended or modified in any manner materially adverse to the Lessee without its
consent.
Section 13.02. Further Assurances. The Lessee hereby confirms
to the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the Indenture,
the Owner Trustee may not enter into any amendment, modification or supplement
of, or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of the
Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the
Owner Participant a copy of each notice, statement, request, report or other
communication given or required to be given to the Owner Trustee under the
Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. The Pass Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
Section 13.04. No Retroactive Application. This Agreement, the
Lease, the Indenture and the Trust Agreement each amend and restate the
respective original agreements with no intention of retroactive application.
The applicable original agreements have been restated for the convenience of
the parties and such amendments and restatements are not intended to waive or
modify the obligations of any party which accrued or were to have been
performed on or prior to the Delivery Date under such unamended agreements (or,
in the case of this Agreement, the effective date hereof) or to deprive any
party of its rights and remedies in respect thereof and no provisions of such
Original Agreements shall in any way affect or be binding on the Owner Trustee
and the Owner Participant hereunder or under the other Operative Agreements
except to the extent restated therein with respect to periods following the
Delivery Date.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and shall
be deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
Boulevard, Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile
(901) 395-4758; or to such other address as the Lessee shall from time to
time designate in writing to the Lessor, the Indenture Trustee and the
Owner Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
State Street Bank and Trust Company, Two International Place, 4th Floor,
Boston, Massachusetts 02110, Attention: Corporate Trust Department,
telephone (617) 664-5526, facsimile (617) 664-5371; or to such other
address as the Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at 5800 East
Pawnee, Wichita, Kansas 67218, Attention: General Counsel, telephone (316)
660-1256, facsimile (316) 660-1264, with a copy to Textron Financial
Corporation, 40 Westminster Street, Providence, Rhode Island 02903,
Attention: Vice President and Division Manager, Structured Finance
Division, telephone (401) 621-4225, facsimile (401) 621-5045; or to such
other address as the Owner Participant may from time to time designate in
writing to the Lessee and the Indenture Trustee;
(d) If to the Indenture Trustee, the Subordination Agent or the
Pass Through Trustee, to its office at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department, telephone (801)
246-5053, facsimile (801) 246-5630; or to such other address as the
Indenture Trustee or the Pass Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant; and
(e) If to a Liquidity Provider, to its office at
Palmengartenstrasse 5-9, D- 60325 Frankfurt am Main, Germany, Attention:
Head of Aircraft Finance Department KIII b 3, telephone 011-49-69-7431-0,
facsimile 011-49-69-7431- 2944; or to such other address as a Liquidity
Provider shall from time to time designate in writing to the Lessor, the
Lessee and the Indenture Trustee.
ARTICLE 15
REFINANCING
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Delivery Date. Such Refinancings may be placed in either the private or public
markets and shall be denominated in United States dollars (or in any other
foreign currency so long as there is no foreign currency risk to the Owner
Participant), and shall be on terms that do not materially adversely affect the
Owner Participant. The Owner Participant agrees to negotiate promptly in good
faith to conclude an agreement with the Lessee as to the terms of any such
Refinancing transaction (including the terms of any debt to be issued in
connection with such refinancing and the documentation to be executed in
connection therewith). Without the consent of the applicable Owner
Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities laws
resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no
Refinancing will be permitted unless the Owner Participant shall have received
at least 10 Business Days' prior written notice of the closing date of such
Refinancing, the Owner Participant shall have been provided such longer period
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section 467
of the Code) for which it has not been or will not have been indemnified by the
Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the Refinancing
in accordance with Section 3.04 of the Lease, and thereafter the amounts set
forth in such schedule shall become the amounts payable under the Lease. Upon
the consummation of the Refinancing, the evidence of indebtedness issued
pursuant to the Refinancing shall be considered "Certificates" for purposes of
this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall
have no obligation to proceed with any Refinancing transaction as contemplated
by this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay principal
and interest in respect of the refinanced indebtedness), cost or expense
(including, without limitation, reasonable attorneys' fees and Make-Whole
Premium and any other premiums or other amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole
Premium and breakage costs, if any, and all other sums due and owing on
the Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing
by the Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Certificates then outstanding shall have been made by
the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to
the Owner Participant, as Supplemental Rent under the Lease, sufficient
funds to pay any breakage costs, Make-Whole Premium and any other amounts
due under the Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such
party's obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing
or would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall
permit the Lessee to place the Refinancing loan certificates with an ERISA
Plan. The Lessee shall not indemnify the Owner Participant, or any of the
Owner Participant's Affiliates, assigns, officers, directors, employees,
agents and servants, for any Taxes, within the meaning of Article 8
hereof, or Expenses, within the meaning of Article 9 hereof, arising under
or in connection with any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, if the sole underwriter
or the manager or co-manager of the underwriting syndicate or the selling
or placement agent of the Refinancing loan certificates has an exemption
from the prohibited transaction rules under Section 406 of ERISA and
Section 4975 of the Code with respect to pass through certificates, such
as Prohibited Transaction Exemption 90-24 or any other comparable
exemption, unless such exemption is not available or is not valid with
respect to such Refinancing loan certificates. If such exemption is not
available or is not valid, then the Lessee shall indemnify the Owner
Participant pursuant to, and to the extent provided for, under Articles 8
and 9 hereof for Taxes and Expenses arising under or in connection with
any "prohibited transaction", within the meaning of Section 406 of ERISA
or Section 4975 of the Code, resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee
shall notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). If Series C Certificates are outstanding following the Delivery
Date and are required to be prepaid on the Series C Prepayment Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, promptly
upon receipt of such notification but in any event no later than the Series C
Prepayment Date, an amount equal to any unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee (A) on the first Payment Date subsequent to the Delivery
Date, interest accrued on the Certificates from and including the last Payment
Date (or, if none, the Certificate Closing Date), to, but excluding, the
Delivery Date and (B) on each Payment Date after the Delivery Date but prior to
the Series C Prepayment Date, interest accrued on the Series C Certificates, if
any, outstanding after the Delivery Date which are required to be prepaid on
such Series C Prepayment Date pursuant to Section 2.03(b) of the Original
Participation Agreement, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. In addition, the Lessee will pay to the Indenture
Trustee on behalf of the Owner Trustee all amounts owed by the Owner Trustee
pursuant to clause (b) of the last paragraph of Section 2.04 of the Indenture.
(c) If any Series C Certificates outstanding after the Delivery
Date are subject to prepayment on the Series C Prepayment Date pursuant to
Section 6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the
Subordination Agent, on behalf of the Owner Trustee, on the Series C Prepayment
Date the excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(d) All amounts payable by the Lessee pursuant to this Section
17.02 shall be paid to the Indenture Trustee or the Subordination Agent, as the
case may be, at its principal office at 79 South Main Street, Salt Lake City,
Utah, 84111, Attention: Corporate Trust Department, or as the Indenture Trustee
or the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(e) Prior to the date on which the Lessee shall be obligated to
make any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying the
amount of such payment with respect to each series of Certificates.
(f) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass Through
Certificate which is funded from a Specified Shortfall Payment (as defined
below) shall be avoided as a preference under Section 547 of the Bankruptcy
Code and the Subordination Agent, the Pass Through Trustee or any holder of any
Pass Through Certificate becomes liable for such portion or (ii) (x) the Lessee
shall be the subject of a voluntary or involuntary proceeding under Chapter 7
or Chapter 11 of the Bankruptcy Code on a date less than fifteen days prior to
the expiration date of the Letter of Credit (after giving effect to any
extensions of such expiration date) and (y) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass Through
Certificate which is funded from a Specified Shortfall Payment could be avoided
as a preference under Section 547 of the Bankruptcy Code and the Subordination
Agent, the Pass Through Trustee or any holder of any Pass Through Certificate
could become liable for such portion, the Subordination Agent shall be entitled
to draw under the Letter of Credit an amount equal to the aggregate amount of
such liability up to the Maximum Stated Amount. The Letter of Credit shall
expire no earlier than the date 91 days after the later of the last Specified
Shortfall Payment payable under this Section 17.02 and the last "Specified
Shortfall Payment" payable under Section 17.02 of any Related Participation
Agreement. In the event of any drawing under the Letter of Credit pursuant to
clause (ii) of this subsection (f), the proceeds of such drawing shall be
applied in accordance with the Intercreditor Agreement. For purposes of this
subsection (f), "Specified Shortfall Payment" shall mean any payment by the
Lessee pursuant to this Section 17.02 (i) in respect of any Losses which occur
as a result of delivery of the Aircraft on a date other than August 27, 1998,
or (ii) in respect of interest accrued for any applicable period on any
Certificate in excess of any earnings on investments in the Collateral Account
for such period.
Section 17.03. Counterparts. This Agreement may be executed by
the parties in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement
nor any of its terms may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to the Owner Trustee and the Indenture Trustee. A copy of each such
termination, amendment, supplement, waiver or modification shall also be
delivered to each other party to this Agreement.
The consent of each of the Pass Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 8.01(b) of the Indenture,
provided that the Pass Through Trustee shall be entitled to receive an Opinion
of Counsel (as defined in the Pass Through Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, the Lessee
and its successors and permitted assigns, the Subordination Agent and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed), the Indenture Trustee and its
successors as Indenture Trustee (and any additional indenture trustee
appointed) under the Indenture, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional pass through trustee appointed) and
the LC Bank and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, Indenture Trustee
and the Pass Through Trustee. Each of SSB and FSB is entering into this
Agreement solely in their respective capacities (except to the extent otherwise
expressly indicated), in the case of SSB, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of FSB, not in
its individual capacity but solely as Indenture Trustee under the Indenture and
as Pass Through Trustee under the Pass Through Agreement, and except as
otherwise expressly provided in this Agreement or in the Lease, the Indenture,
the Pass Through Agreement or the Trust Agreement, neither SSB, nor FSB, shall
be personally liable for or on account of its statements, representations,
warranties, covenants or obligations under this Agreement; provided, however,
that each of SSB and FSB accepts the benefits running to it under this
Agreement, and each agrees that (except as otherwise expressly provided in this
Agreement or any other Operative Agreement to which it is a party) it shall be
liable in its individual capacity for (a) its own gross negligence or willful
misconduct (whether in its capacity as trustee or in its individual capacity),
(b) any breach of representations and warranties or any breach of covenants
made in its individual capacity pursuant to or in connection with this
Agreement or the other Operative Agreements to which it is a party, (c) any
breach, in the case of the Owner Trustee, of its covenants contained in
Sections 3.05 and 3.08 of the Indenture, (d) the failure to use ordinary care
in receiving, handling and disbursing funds, (e) in the case of the Owner
Trustee, Lessor's Liens attributable to it in its individual capacity, (f) in
the case of the Indenture Trustee, Indenture Trustee's Liens and (g) taxes,
fees or other charges on, or based on, or measured by, any fees, commissions or
compensation received by it in connection with the transactions contemplated by
the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to
applicable legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each instance
obtain the prior written approval of each other party to this Agreement
concerning the exact text and timing of news releases, articles and other
information releases to the public media concerning any Operative Agreements.
Section 17.10. Certain Limitations on Reorganization. The
Indenture Trustee and the Pass Through Trustee agree that, if (i) the Owner
Trustee becomes or all or any part of the Lessor's Estate or the trust created
by the Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or indirectly
on account of any amount payable as Make-Whole Premium, principal or interest
on the Certificates, or any other amount payable on any Certificate that is
provided in the Operative Agreements to be nonrecourse to the Owner Participant
and (iii) the Indenture Trustee actually receives any Recourse Amount which
reflects any payment by the Owner Participant on account of (ii) above, then
the Indenture Trustee, as the case may be, shall promptly refund to the Owner
Participant such Recourse Amount. For purposes of this Section 17.10,
"Recourse Amount" means the amount by which the portion of such payment by the
Owner Participant on account of clause (ii) above received by the Indenture
Trustee exceeds the amount which would have been received by the Indenture
Trustee if the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section shall
prevent the Indenture Trustee from enforcing any individual obligation (and
retaining the proceeds thereof) of the Owner Participant under this Agreement
or any other Operative Agreement to the extent herein or therein provided, for
which the Owner Participant has expressly agreed by the terms of this Agreement
to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS
BEING DELIVERED IN NEW YORK.
Section 17.12. Section 1110 Compliance. The parties hereto
agree that the transactions contemplated by the Operative Agreements are
expressly intended to be, shall be and should be construed so as to be entitled
to the benefits and protection of Section 1110 of the Bankruptcy Code.
Section 17.13. Reliance of Liquidity Providers. Each of the
parties hereto agrees and acknowledges that each Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that each Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations
and warranties were made to such Liquidity Provider directly. The terms of
this Agreement shall inure to the benefit of each Liquidity Provider, their
respective successors and permitted assigns.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on
behalf of itself and each of its Affiliates, agents, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature, any non-public information supplied to
it pursuant to this Agreement which is identified by the Person supplying the
same as being confidential at the time the same is delivered to such party,
provided that nothing herein shall limit the disclosure of any such information
(i)to the extent required by statute, rule, regulation or judicial process,
(ii)to counsel for any of the parties hereto, (iii)to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv)in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v)to a subsidiary or Affiliate of the parties hereto,
(vi)to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
first executes and delivers to the respective party making such assignment an
agreement in writing to be bound by the provisions of this Section 18.01 or
(vii) in the case of the Owner Participant or the Owner Trustee (in its
individual or trust capacity) to the Owner Trustee (in its individual or trust
capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of
the date first above written.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:_________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:_________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
OWNER PARTICIPANT:
CESSNA FINANCE CORPORATION
By:_________________________________________
Name:
Title:
INDENTURE TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name: Greg A. Hawley
Title: Vice President
PASS THROUGH TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name: Greg A. Hawley
Title: Vice President
SUBORDINATION AGENT:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Subordination Agent
By:__________________________________________
Name: Greg A. Hawley
Title: Vice President
OWNER TRUSTEE:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name: Paul D. Allen
Title: Vice President
SCHEDULE I
OWNER PARTICIPANT'S COMMITMENT;
DEBT PORTION
(as a percentage of Purchase Price)
Owner Participant's Commitment 24.495%
- ------------------------------
Debt Portion 75.505%
- ------------
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
August ___, 1998
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal
Express Corporation, a Delaware corporation ("Federal"), and am familiar with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement"), among Federal,
as Lessee and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security Bank, National Association, not in
its individual capacity, except as otherwise stated, but solely as Indenture
Trustee, Pass Through Trustee and Subordination Agent, relating to the
Aircraft. This opinion is being delivered pursuant to Section 4.01(d)(i) of
the Participation Agreement. Capitalized terms not otherwise defined herein
have the meanings assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one Airbus A300F4-605R aircraft (the "Aircraft"), using
the proceeds from the public offering of the Pass Through Certificates. Three
Classes of Pass Through Certificates were issued by three Pass Through Trusts
formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that were issued
under the Indenture, as supplemented by the related Indenture and Security
Agreement Supplement.
In connection with the opinions expressed below, I have examined,
or caused to be examined by attorneys under my supervision, executed
counterparts of the Operative Agreements. We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Operative
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Operative Agreements, other than Federal, has full
power, authority and legal right to enter into such Operative Agreements and
that each such Operative Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Operative Agreements to
which it is a party. Federal is duly qualified to do business and is in good
standing in the State of Tennessee and each other state of the United States in
which its operations or the nature of its business requires Federal to so
qualify, except where the failure to so qualify would not have a material
adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Operative Agreements to which Federal is a
party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms.
4. Neither the execution and delivery by Federal of the
Operative Agreements to which Federal is a party, nor the consummation of any
of the transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Operative Agreements to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a) require
the consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were or
are required to be performed on or prior to the Delivery Date and which were or
shall have been accomplished on or prior to the Delivery Date) the registration
with, or the taking of any other action in respect of, the Aeronautics
Authority, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (i)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (ii) compliance with the securities laws of each
applicable state and (iii) the filings and recordings referred to in paragraph
7 below, or (b) contravene any judgment or order applicable to or binding on
Federal or any law or governmental rule or regulation of the United States or
of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened
action or proceeding before any court or administrative agency which
individually (or in the aggregate in the case of any group of related lawsuits)
(i) is expected to have a material adverse effect on (A) the financial
condition of Federalexcept for the matters described under "Legal Proceedings"
in Federal's Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
as to all of which I can express no opinion at this time concerning Federal's
liability (if any) or the effect of any adverse determination upon the
business, condition (financial or otherwise) or operations of Federal, or (B)
the ability of Federal to perform its obligations under the Operative
Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name
of the Aircraft pursuant to the Transportation Code, and except for the filing
and, where appropriate, recording, pursuant to the Transportation Code of (A)
AVSA's FAA Bill of Sale, (B) the Trust Agreement, (C) the Lease (with the Lease
Supplement covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft attached as exhibits) and (D) the
Indenture (with the Indenture and Security Agreement Supplement covering the
Aircraft attached as an exhibit), no further action, including any filing or
recording of any document is necessary or advisable in order to establish and
perfect the Owner Trustee's title to and interest in the Aircraft as against
Federal and any third parties, or to perfect the first mortgage lien on the
Aircraft in favor of the Indenture Trustee in each case with respect to such
portion of the Aircraft as is covered by the recording system established by
the Transportation Code.
8. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
9. On the date hereof the Owner Trustee received good and
valid title to the Aircraft free and clear of all liens on file with the FAA,
except for Liens permitted under Section 6.01(a) of the Lease.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in the
State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Operative Agreements to which Federal is a party are
based upon the assumption for purposes of such opinions and without independent
analysis that, notwithstanding the respective choice of laws clauses in the
Operative Agreements, the governing law with respect to each of the Operative
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the Lease
may also be limited by applicable laws which may affect the remedies provided
therein but which do not in my opinion affect the validity of the Lease or make
such remedies inadequate for the practical realization of the benefits intended
to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have
relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to
the extent such matters are addressed in such counsel's opinion and subject to
the assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
----------
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation,
a Delaware corporation ("Federal Express"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Participation Agreement"), among Federal Express, as Lessee and
Initial Owner Participant, Cessna Finance Corporation, as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity, except as otherwise stated, but solely as Owner
Trustee, and First Security Bank, National Association, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee, Pass
Through Trustee and Subordination Agent, relating to the Aircraft. This
opinion is being delivered pursuant to Section 4.01(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one Airbus A300F4-605R Aircraft (the "Aircraft") using
the proceeds from the public offering of the Pass Through Certificates. On the
Certificate Closing Date, three Classes of Pass Through Certificates were
issued by separate Pass Through Trusts, each formed to acquire, among other
securities, the Certificates bearing a particular interest rate and having a
particular Maturity issued under the Indenture. The Aircraft is to be leased
to Federal Express by the Owner Trustee pursuant to the Lease and subjected to
the Lien of the Indenture, and is to be delivered by the Owner Trustee to the
Lessee on this date, and in connection with the delivery of the Aircraft, the
Owner Trustee and Federal Express will execute and deliver the Lease
Supplement, and the Owner Trustee will execute and deliver the Indenture and
Security Agreement Supplement.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements. We have also examined
originals, or copies certified to our satisfaction, of such other agreements,
documents, certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such opinions.
In such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action was
or is necessary in order to establish the Owner Trustee's title thereto and
interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement
and the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee, the
Lease, as supplemented, will create a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the Transportation
Code being subject to the due and timely filing and, where appropriate,
recording of (A) AVSA's FAA Bill of Sale, (B) the Trust Agreement, (C) the
Lease (with the Lease Supplement covering the Aircraft, the Indenture and the
Indenture and Security Agreement Supplement covering the Aircraft attached as
exhibits) and (D) the Indenture (with the Indenture and Security Agreement
Supplement covering the Aircraft attached as an exhibit), pursuant to the
Transportation Code, and assuming that at the time of such filing no other
documents relating to the Aircraft have been filed pursuant to the
Transportation Code.
3. Assuming (i) the due authorization, execution and
delivery of the Operative Agreements by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Operative Agreements, (iii) that the execution, delivery and performance of
each of the Operative Agreements by each of the parties thereto will not
violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates issued under
the Indenture in accordance with the terms of the Indenture, and (v) that the
form of each Operative Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Operative Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of the
Owner Trustee enforceable against the Owner Trustee in accordance with their
terms and the terms of the Indenture and are entitled to the benefits of the
Indenture, including the benefit of the security interest created thereby; and
(D) the beneficial interest of the Owner Participant under the Trust Agreement
in and to the properties which are part of the Trust Indenture Estate is
subject, to the extent provided in the Indenture, as supplemented by the
Indenture and Security Agreement Supplement, to the Lien of the Indenture in
favor of the Holders. The opinions set forth in this paragraph 3 are subject
to the due filing and, where appropriate, recording with the FAA of the
documents referred to in paragraph 2 above.
4. (a) Each of the Operative Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express
of each of the Operative Agreements to which Federal Express is a party do not
violate, and fully comply with, any laws and governmental rules and regulations
of the State of New York that may be applicable to Federal Express. The
opinion set forth in this paragraph 4(b) is rendered without regard to the
taking of any action or the conduct of any other business by Federal Express in
the State of New York other than the transactions contemplated by the Operative
Agreements.
5. The execution, delivery and performance of the Operative
Agreements (other than the Certificates) by the Owner Trustee in its individual
or trust capacity, as the case may be, and the issuance, execution, delivery
and performance of the Certificates by the Owner Trustee in its trust capacity
do not violate, and fully comply with, any laws and governmental rules and
regulations of the State of New York that may be applicable to the Owner
Trustee in its individual or trust capacity, as the case may be. The opinion
set forth in this paragraph 5 is rendered without regard to the effect, if any,
on such issuance (in the case of the Certificates), execution, delivery or
performance, of the taking of any action, the conduct of any business or the
exercise of any other powers by State Street Bank and Trust Company of
Connecticut, National Association in its individual or trust capacity in the
State of New York not related to the transactions contemplated by the Operative
Agreements. We have assumed that State Street Bank and Trust Company of
Connecticut, National Association has made the filings necessary to comply with
Section 131.3 of the Banking Law of the State of New York, however we express
no opinion as to whether State Street Bank and Trust Company of Connecticut,
National Association is required to comply with said Section 131.3.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the financing
statements referred to in Section 4.01(f) of the Participation Agreement), and
the beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the Indenture, to
the Lien of the Indenture in favor of the Holders of the Certificates issued
and to be issued under the Indenture.
7. The Indenture and Security Agreement Supplement, pursuant
to the Granting Clause of the Indenture, creates, as security for the
Certificates duly issued and to be issued under the Indenture, the first
priority security interest in the Aircraft it purports to create, the
perfection and rank thereof being subject to the registration with the FAA of
the Aircraft in the name of the Owner Trustee and the due filing and, where
appropriate, recording in accordance with the Transportation Code of the
documents referred to in paragraph 2 above. We express no opinion with respect
to the status of any security interest in any portion of the Aircraft which
does not constitute an "aircraft" or "aircraft engine", as defined in
paragraphs (6) and (7) of Section 40102(a) of the Transportation Code.
8. Except for (i) the filings and recordings referred to in
paragraph 2 above, (ii) the registration of the issuance and sale of the Pass
Through Certificates under the Securities Act and (iii) compliance with the
securities laws of each applicable state, neither the execution and delivery by
Federal Express of the Participation Agreement or any other Operative Agreement
to which it is a party, nor the consummation of any of the transactions by
Federal Express contemplated thereby, requires the consent or approval of, the
giving of notice to, or the registration with, or the taking of any other
action in respect of, the Department of Transportation, the FAA, the Securities
and Exchange Commission or any other Federal or New York State governmental
authority.
9. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to register
such beneficial interest under the Securities Act of 1933, as amended, or to
qualify the Trust Agreement or the Indenture under the Trust Indenture Act of
1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtors
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of Daugherty, Fowler &
Peregrin and Karen M. Clayborne, Senior Vice President and General Counsel
of Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the
laws of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which
may affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided
thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(2)(a)
[Letterhead of Chadbourne & Parke LLP]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Cessna Finance Corporation, a
Kansas corporation (the "Owner Participant"), and Textron Financial
Corporation, a Delaware corporation (the "Owner Participant Guarantor"), in
connection with the transactions contemplated by:
1. the Participation Agreement (Federal Express Corporation
Trust No. N677FE) dated as of June 15, 1998, as amended and restated as of
August 1, 1998 (the "Participation Agreement") among Federal Express
Corporation, a Delaware corporation (therein, together with its successors
and permitted assigns, the "Lessee" and the "Initial Owner Participant"),
the Owner Participant, State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its
individual capacity, except as otherwise expressly stated in the
Participation Agreement, but solely as owner trustee under the Trust
Agreement (in such capacity as trustee, together with its successors and
permitted assigns, the "Owner Trustee"), and First Security Bank, National
Association, a national banking association, not in its individual
capacity, except as otherwise expressly stated in the Participation
Agreement, but solely as (a) indenture trustee under the Indenture, (b)
pass through trustee of three separate Pass Through Trusts and (c)
subordination agent (together with its successors and permitted assigns,
the "Indenture Trustee");
2. the Trust Agreement (Federal Express Corporation Trust No.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Agreement") between the Owner Trustee and the Owner
Participant;
3. the Tax Indemnity Agreement (Federal Express Corporation
Trust No. N677FE) dated as of August 1, 1998 (the "Tax Indemnity
Agreement") between the Lessee and the Owner Participant;
4. the Ancillary Agreement I (Federal Express Corporation Trust
No. N677FE) dated the date hereof (the "Ancillary Agreement") among the
Owner Participant, the Lessee, the Owner Trustee and the Indenture
Trustee; and
5. the Owner Participant Guaranty (Federal Express Corporation
Trust No. N677FE) dated the date hereof (the "Owner Participant Guaranty")
by the Owner Participant Guarantor in favor of the Lessee, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee.
(collectively, the "Agreements").
The Participation Agreement, the Trust Agreement, the Tax
Indemnity Agreement and the Ancillary Agreement together are sometimes referred
to herein as the Owner Participant Agreements (the "Owner Participant
Agreements").
The Owner Participant has requested that we deliver this opinion
to you pursuant to the Participation Agreement and we understand and agree that
you may rely on the opinions expressed herein. Capitalized terms used herein
without definition shall have the meanings set forth in Schedule II to the
Participation Agreement.
As such counsel, we have examined the Agreements and have
examined and relied upon the representations and warranties as to factual
matters contained therein and upon the originals or copies, certified to our
satisfaction, of such records, documents and other instruments as we have
deemed necessary or advisable for the purposes of rendering this opinion.
In rendering the opinions expressed below, we have assumed that
each of the Agreements has been duly authorized, executed and delivered by each
of the parties thereto, that each such party is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite power and authority to
execute, deliver and perform each Agreement to which it is a party, and, except
as specifically addressed herein, that such execution and delivery did not, and
such performance will not, breach, conflict with, or constitute a violation of,
the laws or governmental rules or regulations of any jurisdiction.
Based on and in reliance upon the foregoing, we are of the
opinion that:
1. The Participation Agreement, the Tax Indemnity Agreement and
the Ancillary Agreement constitute the legal, valid and binding
obligations of the Owner Participant, enforceable against the Owner
Participant in accordance with their terms, except as the enforceability
thereof may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally, (b) general principles of equity whether considered
in a proceeding at law or in equity, and (c) statutory requirements with
respect to good faith, fair dealing and commercial reasonableness and by
the effect of judicial decisions that have held that certain provisions
are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially
unreasonable, or where a default is not material.
2. No approval or consent of, notice to, or filing or
registration with any United States Federal or New York regulatory body is
necessary in connection with the execution, delivery and performance by
the Owner Participant or compliance by the Owner Participant with any of
the provisions of the Owner Participant Agreements, the failure of which
to obtain would have a material adverse effect upon the ability of the
Owner Participant to enter into and perform its obligations under the
Owner Participant Agreements, except for such filings as may be required
with the Federal Aviation Administration, as to which we express no
opinion.
3. No approval or consent of, notice to, or filing or
registration with any United States Federal or New York regulatory body is
necessary in connection with the execution, delivery and performance by
the Owner Participant Guarantor or compliance by the Owner Participant
Guarantor with any of the provisions of the Owner Participant Guaranty,
the failure of which to obtain would have a material adverse effect upon
the ability of the Owner Participant Guarantor to enter into and perform
its obligations under the Owner Participant Guaranty, except for such
filings as may be required with the Federal Aviation Administration, as to
which we express no opinion.
4. Neither the execution and delivery of the Owner Participant
Agreements by the Owner Participant, nor the consummation by the Owner
Participant of any of the transactions contemplated thereby, or the
performance of its obligations thereunder, violates any law, governmental
rule or regulation of the state of New York or the Federal government of
the United States of America or any governmental subdivision of either
thereof.
5. Neither the execution and delivery of the Owner Participant
Guaranty by the Owner Participant Guarantor, nor the consummation by the
Owner Participant Guarantor of any of the transactions contemplated
thereby, or the performance of its obligations thereunder, violates any
law, governmental rule or regulation of the state of New York or the
Federal government of the United States of America or any governmental
subdivision of either thereof.
No opinion is expressed herein concerning any laws other than the
laws of the state of New York and the laws of the United States of America. No
opinion is expressed herein as to the matters governed by (i) any Federal or
state securities laws, (ii) any Federal or state banking laws, (iii) any
Federal or state tax laws, or (iv) the Federal Aviation Act, as amended, or any
other laws, statutes, rules or regulations relating to the acquisition,
ownership, registration, leasing, use or sale of the Aircraft.
This opinion is being delivered pursuant to Section 4.01(d)(iii)
of the Participation Agreement for your sole benefit, and no other person or
entity shall be entitled to rely upon this opinion without our express written
consent. This opinion is limited to the matters stated herein, and no opinion
is implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(2)(b)
[Letterhead of In-House Counsel of Owner Participant and
Owner Participant Guarantor]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
I am Assistant General Counsel of Textron Financial Corporation,
and in that capacity have acted as counsel to Textron Financial Corporation, a
Delaware corporation (the "Owner Participant Guarantor") and to Cessna Finance
Corporation, a Kansas corporation and a wholly-owned subsidiary of the Owner
Participant Guarantor (the "Owner Participant") in connection with the
transactions contemplated by (1) the Participation Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement") among Federal
Express Corporation, a Delaware corporation (therein, together with its
successor and permitted assigns, the "Lessee" and the "Initial Owner
Participant"), the Owner Participant, State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
otherwise expressly stated in the Participation Agreement, but solely as owner
trustee under the Trust Agreement (in such capacity as trustee, together with
its successors and permitted assigns, the "Owner Trustee"), First Security
Bank, National Association, not in its individual capacity, except as otherwise
expressly stated in the Participation Agreement, but solely as (a) indenture
trustee under the Indenture (in such capacity as trustee together with its
successors and permitted assigns, the "Indenture Trustee"), (b) pass through
trustee of three separate Pass Through Trusts (in such capacity as trustee
together with its successors and permitted assigns, the "Pass Through Trustee")
and (c) subordination agent (in such capacity as trustee together with its
successors and permitted assignees, the "Subordination Agent"); (2) the Trust
Agreement (Federal Express Corporation Trust No. N677FE) dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Trust Agreement")
between the Owner Trustee and the Owner Participant; (3) the Tax Indemnity
Agreement (Federal Express Corporation Trust No. N677FE) dated as of August 1,
1998 (the "Tax Indemnity Agreement") between the Owner Participant and the
Lessee; (4) the Ancillary Agreement I (Federal Express Corporation Trust No.
N677FE) dated August 1, 1998 (the "Ancillary Agreement") among the Owner
Participant, the Lessee, the Owner Trustee and the Indenture Trustee and (5)
the Owner Participant Guaranty dated the date hereof (the "Owner Participant
Guaranty"). Unless otherwise defined herein, all capitalized terms used herein
shall have the respective defined meanings set forth in Schedule II to the
Participation Agreement.
For purposes of the opinions expressed below, I have examined
executed counterparts or copies of the Participation Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Owner Participant Guaranty and the
Ancillary Agreement (collectively, the "Owner Participant Documents"). I have
further examined and relied upon the accuracy of original, certified,
conformed, photographic or telecopied copies of such records, agreements,
certificates and other documents as I have deemed necessary or appropriate to
enable me to render the opinions expressed herein. In arriving at the opinions
expressed below, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to me as certified, conformed, photographic or telecopied copies. As to any
opinion expressed below relating to the existence, qualification and good
standing of any corporation or other entity in any jurisdiction, my opinion
relies solely upon and is limited by those certificates and telegraphic and
telephonic confirmations given by public officials and assumes the same to have
been properly given and to be accurate. As to various questions of fact
material to my opinion, I have relied solely upon the accuracy of the
statements, representations and warranties made in the Owner Participant
Documents. I have assumed, except with regard to the Owner Participant and the
Owner Participant Guarantor, that each of the Owner Participant Documents has
been duly authorized, executed and delivered by the respective parties thereto
and that they constitute the legal, valid and binding obligations of each party
thereto enforceable against each such party in accordance with their respective
terms.
Based upon the foregoing and such other information as I have
deemed necessary for purposes hereof, and subject to the assumptions,
qualifications and reliances set forth herein, I am of the opinion that as of
the date hereof:
1. Each of the Owner Participant and the Owner Participant
Guarantor are corporations duly organized, validly existing and in good
standing under the laws of Kansas and Delaware, respectively, and has the
full corporate power, authority and legal right to enter into, perform and
to carry out the transactions contemplated by the Owner Participant
Documents.
2. Each of the Owner Participant and the Owner Participant
Guarantor has duly authorized, executed and delivered the Owner
Participant Documents to which each is a respective party.
3. Neither of the execution, delivery or performance by the
Owner Participant and the Owner Participant Guarantor, as the case may be,
of the Owner Participant Documents, nor the compliance with the terms and
provisions thereof by the Owner Participant and the Owner Participant
Guarantor, as the case may be, (a) requires the consent or approval of,
the giving of notice to, the registration with, the recording or filing of
any document with or the taking or any other action with respect to any
governmental authority of their respective states of incorporation or the
federal government of the United States of America; (b) violates any law,
governmental rule or regulation of their respective states of
incorporation or the United States of America or any governmental
authority or agency thereof; (c) results in the breach of any of the
terms, conditions or provisions of the Articles of Incorporation or
By-Laws of the Owner Participant or the Owner Participant Guarantor; (d)
to my knowledge violates or constitutes a default under any indenture,
mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or contract or any other agreement or instrument
to which the Owner Participant or the Owner Participant Guarantor are
bound or (e) to my knowledge requires any consent or approval of its
stockholders or any approval or consent of any trustee or holder of any
indebtedness or obligation of the Owner Participant or the Owner
Participant Guarantor.
4. To my knowledge, there are no actions, suits, investigations
or proceedings pending or, to the best of my knowledge without independent
investigation, threatened against or affecting the Owner Participant or
the Owner Participant Guarantor in any court or before any administrative
agency or arbitrator, which, if adversely determined, would adversely
affect the ability of the Owner Participant or the Owner Participant
Guarantor to perform their respective obligations under the Owner
Participant Documents, and I am not aware of any pending or threatened
actions or proceedings before any court, administrative agency or tribunal
involving the Owner Participant or the Owner Participant Guarantor in
connection with the transactions contemplated by the Owner Participant
Documents.
5. The Owner Participant Guaranty constitutes a legal, valid and
binding obligation of the Owner Participant Guarantor enforceable against
the Owner Participant Guarantor in accordance with its terms.
Whenever a statement herein is qualified by the phrase "to my
knowledge," it is intended to indicate that, during the course of my
representation of the Owner Participant and the Owner Participant Guarantor, as
the case may be, including making inquiries of and obtaining certificates from
officers of the Owner Participant and the Owner Participant Guarantor, as the
case may be, no information that would give me current actual knowledge with
respect to such statement has come to my attention. I have undertaken no
independent investigation to determine the accuracy of such statement and any
limited inquiry undertaken by me during the preparation of this opinion letter
should not be regarded as such an investigation.
I am a member of the bar of the State of Rhode Island and do not
purport to express any opinion herein concerning any laws other than the laws
of the State of Rhode Island, the corporate laws of the States of Delaware and
Kansas, the latter based on inquiries of Kansas counsel, and the federal laws
of the United States of America as in effect on the date hereof. Further, I
have made no investigation and express no opinion, as to any laws, statutes,
rules or regulations applicable due to the particular nature of the equipment
subject to the Lease, and I express no opinion as to any tax or securities laws
or laws relating to the environment or public health or safety.
This opinion is furnished by me as counsel to the Owner
Participant and the Owner Participant Guarantor for your sole benefit and for
the benefit of your successors and assigns and no other person or entity shall
rely on this opinion without my express written consent. Subject to the
preceding sentence, this opinion shall not be published or reproduced in any
manner or distributed or circulated to any person without my express written
consent. My opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein. This
opinion is given to you as of the date hereof, and I assume no obligation to
advise you of any changes that may hereafter be brought to my attention.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(3)
[Letterhead of Ray, Quinney & Nebeker]
August ___, 1998
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Participation Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Participation Agreement"), among Federal Express Corporation, as
Lessee and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee, Pass Through
Trustee and Subordination Agent. Pursuant to the Participation Agreement, one
Airbus A300F4-605R aircraft bearing U.S. Registration No. N677FE (the
"Aircraft") is being financed. This opinion is furnished pursuant to Section
4.01(d)(iv) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined are used as defined in the Participation Agreement,
except that references herein to any instrument shall mean such instrument as
in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Indenture;
(c) The Ancillary Agreement I; and
(d) The French Pledge Agreement.
(Each of the documents identified in paragraphs (a) through (d) above are
collectively referred to as the "Indenture Trustee Documents".)
We have also examined originals or copies of such other
documents, corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Indenture Trustee Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national banking
association, with banking and trust powers, and each of First Security and
the Indenture Trustee, as the case may be, has full corporate power,
authority and legal right to execute, deliver and perform each of the
Indenture Trustee Documents to which it is or is to be a party.
2. Each of First Security and the Indenture Trustee, as the case
may be, has duly authorized, executed and delivered each Indenture Trustee
Document to which it is a party; each such document constitutes a legal,
valid and binding obligation of the Indenture Trustee (and, to the extent
set forth in the respective Indenture Trustee Document, of First Security)
enforceable against the Indenture Trustee (and, to the extent set forth in
the respective Indenture Trustee Document, against First Security) in
accordance with its terms.
3. The Certificates issued and dated the Certificate Closing
Date have been duly authenticated and delivered by the Indenture Trustee
pursuant to the terms of the Indenture.
4. Neither the authorization, execution and delivery by the
Indenture Trustee or First Security, as the case may be, of the Indenture
Trustee Documents, nor the authentication and delivery by the Indenture
Trustee of the Certificates nor the fulfillment or compliance by the
Indenture Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by the
Indenture Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
court or administrative or governmental authority or agency of the State
of Utah or the United States of America governing the banking or trust
powers of First Security.
5. The execution, delivery and performance by the Indenture
Trustee or First Security, as the case may be, of each of the Indenture
Trustee Documents and the authentication and delivery of the Certificates
by the Indenture Trustee are not in violation of the charter or by-laws of
First Security or of any law, governmental rule, or regulation of the
State of Utah or the United States of America governing the banking or
trust powers of First Security or, to our knowledge, of any indenture,
mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which it is a
party or by which it is bound or, to our knowledge, of any judgment or
order of the State of Utah or the United States of America relating to the
banking or trust powers of First Security.
6. There are no fees, taxes or other governmental charges
payable by the Owner Trustee, the Indenture Trustee (except taxes imposed
on fees payable to First Security) or the Certificate Holders to the State
of Utah or any political subdivision thereof in connection with the
execution, delivery or performance of any of the Operative Agreements or
in connection with the issuance and acquisition of the Certificates by the
Certificate Holders or the beneficial interests of the Certificate Holders
in the Trust Indenture Estate solely because First Security (a) has its
principal place of business in the State of Utah, (b) performs (in its
individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the State of Utah, and (c)
engages in any activities unrelated to the transactions contemplated by
the Indenture Trustee Documents in the State of Utah. Neither the
Indenture Trustee nor the trust created under the Indenture will be
subject to any fee, tax or other governmental charge (except for taxes
imposed on fees payable to First Security) under the laws of the State of
Utah or any political subdivision thereof in existence on the date hereof,
on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First
Security (a) has its principal place of business in the State of Utah, (b)
performs (in its individual capacity or as Indenture Trustee) any or all
of its duties under the Indenture Trustee Documents in the State of Utah,
and (c) engages in any activities unrelated to the transactions
contemplated by the Indenture Trustee Documents in the State of Utah.
There is no fee, tax or other governmental charge (except for taxes
imposed on fees payable to First Security) under the laws of the State of
Utah or any political subdivision thereof in existence on the date hereof,
on, based on or measured by any payments under the Certificates by reason
of the creation of the trust under the Indenture solely because First
Security (a) has its principal place of business in the State of Utah, (b)
performs (in its individual capacity or as Indenture Trustee) any or all
of its duties under the Indenture Trustee Documents in the State of Utah,
and (c) engages in any activities unrelated to the transactions
contemplated by the Indenture Trustee Documents in the State of Utah. We
express no opinion as to whether or not any fees, taxes or other charges
are now or hereafter may be payable by the Owner Participant to the State
of Utah or any political subdivision thereof in connection with (a) the
execution, delivery or performance by any of the Indenture, the
Participation Agreement or any of the other Operative Agreements and (b)
the making by the Owner Participant of its investment in the Aircraft.
7. To our knowledge, there are no actions, suits, investigations
or proceedings pending or threatened against or affecting First Security
or the Indenture Trustee, as the case may be, or any of its properties in
any court or before any administrative agency or arbitrator, which, if
adversely determined, would materially adversely affect the ability of
First Security or the Indenture Trustee, as the case may be, to perform
its obligations under any of the Indenture Trustee Documents, and to our
knowledge, there are no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving First
Security or the Indenture Trustee, as the case may be, in connection with
the transactions contemplated by any of the Indenture Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the banking
and trust powers of First Security. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) Title 49 of the United States Code
Annotated (previously known as the Federal Aviation Act of 1958), as
amended and (iii) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in the State of Utah of the
Certificates and the other Indenture Trustee Documents expressed to be governed
by the laws of the State of New York, we have assumed that the laws of New York
are identical to the laws of Utah in all material respects, and that the
Certificates and such Indenture Trustee Documents constitute legal, valid,
binding and enforceable documents or instruments under such laws (as to which
we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument, are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery
by each of the parties thereto, other than First Security and the Indenture
Trustee, of the Indenture Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. We have assumed that all signatures (other than those of the
Indenture Trustee or First Security) on documents and instruments examined by
us are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(4)
[Letterhead of Bingham Dana LLP]
August ___, 1998
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to State Street Bank and Trust Company
of Connecticut, National Association, a national banking association in its
individual capacity (State Street) and its capacity as Owner Trustee (the Owner
Trustee) under the Trust Agreement (Federal Express Corporation Trust No.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1, 1998
between State Street and Cessna Finance Corporation, as Owner Participant
("Owner Participant") (the "Trust Agreement") in connection with the
transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the Lessee) and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security Bank,
National Association, in its individual capacity and as Indenture Trustee (the
"Indenture Trustee"), Pass Through Trustee and Subordination Agent. Except as
otherwise defined herein, all capitalized terms used herein shall have the
respective meanings set forth in, or by reference to, the Participation
Agreement.
The Owner Trustee has requested that we deliver this opinion to
you in accordance with Section 4.01(d)(v) of the Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each of the Operative Agreements to which State
Street or the Owner Trustee, as applicable, is a party (the Owner Trustee
Documents), the Certificate of the Comptroller of the Currency relating to
State Street and originals, or copies certified or otherwise identified to our
satisfaction, of such other corporate records, documents, certificates and
other instruments as we have deemed necessary or advisable for the purposes of
rendering this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Owner Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Owner Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates or in the preparation of this opinion and the
partner of the firm responsible for State Street corporate trust matters, and
without any special or additional investigation undertaken for the purposes of
this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street, the Owner Trustee or the
Owner Participant, as applicable, is subject to the following general
qualifications:
(i) as to any agreement to which State Street or the
Owner Trustee, as applicable, is a party, we assume that such agreement is
the legal, valid and binding obligation of each other party thereto
(except, with respect to the Trust Agreement, the Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 14 and 15 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Owner Participant, may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshaling or other similar laws and rules of law affecting the
enforcement generally of creditors rights and remedies (including such as
may deny giving effect to waivers of debtors' or guarantors' rights);
(iii) no opinion is given herein as to the
enforceability of any particular provision of any of the Owner Trustee
Documents relating to remedies after default or as to the availability of
any specific or equitable relief of any kind. However, we are of the
opinion that, subject to the other limitations and qualifications
contained in this opinion, the remedies provided in the Owner Trustee
Documents, taken as a whole, are adequate for the realization of the
principal benefits or security of said agreements (except for the economic
consequences of procedural or other delay); and
(iv) the enforcement of any rights and the
availability of any specific or equitable relief of any kind may in all
cases be subject to an implied duty of good faith and to general
principles of equity (regardless of whether such enforceability or relief
is considered in a proceeding at law or in equity) and, as to any of your
rights to collateral security, will be subject to a duty to act in a
commercially reasonable manner.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the State of Connecticut and the Federal laws of the United
States of America. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by the Transportation Code, or by any other
law, statute, rule or regulation of the United States relating to the
acquisition, ownership, registration, use, operation, maintenance, repair,
replacement or sale of or the nature of the Aircraft, Airframe or the Engines.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted with
the Secretary of the State of the State of Connecticut, we have made no
examination of, and no opinion is given herein as to the Owner Trustee's or
Owner Participant's title to or other ownership rights in, or the existence of
any liens, charges or encumbrances on, or adverse claims against, any of the
Indenture Estate. Other than as expressed in paragraph 5 below, we express no
opinion as to the creation, attachment, perfection or priority of any mortgage,
security interest or lien in any of the Indenture Estate. Nor do we express
any opinion as to the attachment or perfection of any security interest in any
of the Trust Estate excluded from, or in which the attachment or perfection of
a security interest is not governed by Article 9 of the Uniform Commercial Code
of the State of Connecticut (the "UCC"). In addition, there exist certain
limitations, resulting from the operation of Section 9-306 of the UCC, on the
perfection of the security interests in proceeds created by the Operative
Agreements.
Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of original filing of UCC financing statements to maintain
effectiveness of such financing statements and perfection of security
interests. Further, additional financing statements may be required to be
filed to maintain the perfection of a security interest if any grantor thereof
changes its name or location or the location of collateral, or makes certain
other changes, as provided in the UCC.
With your permission and without investigation, with respect to
paragraphs 2, 3 and 4 below in connection with our opinion relating to the
legality, validity and binding effect of the documents there referred to, to
the extent that the laws of the State of Connecticut do not govern such
documents, we have assumed that the laws of the jurisdictions whose laws govern
such documents are not materially different from the internal substantive laws
of the State of Connecticut.
In rendering our opinion in paragraphs 14 and 15 below, we have
assumed that the Owner Participant acquired its interest in the Trust Estate
for fair consideration and in good faith without any intention to hinder,
defraud or delay the Owner Participant's creditors.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a national banking association duly
organized, validly existing and in good standing with the Comptroller of
the Currency under the laws of the United States of America, is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of Title
49 of the United States Code, as amended and has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform its obligations under the Trust Agreement
and, as Owner Trustee under the Trust Agreement, to execute, deliver and
perform its obligations under the other Owner Trustee Documents and to
issue, execute, deliver and perform its obligations under the
Certificates.
2. The Owner Trustee has the power and authority to accept title
to and delivery of the Aircraft, and a representative of the Owner Trustee
has been duly authorized to accept title to and delivery of the Aircraft
on behalf of the Owner Trustee.
3. State Street has or had, on the date of execution thereof,
duly authorized, executed, and delivered the Participation Agreement and
the Trust Agreement and the Participation Agreement and the Trust
Agreement constitute the legal, valid and binding obligation of State
Street, enforceable against it in its individual capacity in accordance
with the terms thereof.
4. The Owner Trustee is duly authorized under the Trust
Agreement to execute, deliver and perform each of the Owner Trustee
Documents and each such Owner Trustee Document constitutes a legal, valid
and binding obligation of the Owner Trustee enforceable against the Owner
Trustee in accordance with its terms. The Certificates have been duly
issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and assuming due
authentication thereof by the Indenture Trustee, constitutes the legal,
valid and binding obligation of the Owner Trustee enforceable against the
Owner Trustee in accordance with its terms and the terms of the Indenture;
and the Certificates are entitled to the benefits and security afforded by
the Indenture in accordance with its terms and the terms of the Indenture.
5. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and that the Owner Participant
has the requisite corporate power and authority to enter into and perform
its obligations under the Trust Agreement, said Trust Agreement
constitutes the legal, valid and binding obligation of the Owner
Participant, enforceable against the Owner Participant in accordance with
the terms thereof.
6. To the extent that the UCC is applicable, except for the
Indenture Trustee's taking possession of all monies and securities
(including instruments) constituting part of the Trust Indenture Estate,
no action, including the filing or recording of any document, is necessary
(i) to create under the UCC the security interest in the Trust Indenture
Estate (including the grant and assignment unto the Indenture Trustee of
the security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation Agreement)
which the Indenture by its terms purports to create in favor of the
Indenture Trustee, and (ii) to perfect in the State of Connecticut such
security interest, except for the filing of a UCC financing statement
complying with the formal requisites of Section 9- 402 of the UCC in the
office of the Division of Corporations and Commercial Code of the State of
Connecticut with respect to the security interest, which filing has been
duly effected, and the filing of continuation statements with respect
thereto required to be filed at periodic intervals under the UCC.
7. The Trust Agreement duly creates a legal and valid trust
under Connecticut law; the trust created by the Trust Agreement exists for
the benefit of the Owner Participant as provided therein and creates for
the benefit of the Owner Participant the interest in the Trust Estate
which the Trust Agreement by its terms purports to create, subject however
to the provisions of, and the Liens created by, the Indenture and the
Lease.
8. Neither the execution, delivery or performance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, of the Certificates or the Owner Trustee Documents, the consummation
by the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, of any of the transactions contemplated thereby nor the
compliance by the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, with any of the terms and provisions thereof
(i) requires any approval of its stockholders, any consent or approval of
or the giving of notice to any trustees or holders of any indebtedness or
obligations of it known to us, or (ii) violates its charter documents or
by-laws, or contravenes or will contravene any provision of, or
constitutes a default under, or results in any breach of, or results in
the creation of any Lien (other than as permitted under the Operative
Agreements) upon property under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement, license or other agreement or instrument, in each case, known
to us to which it is a party or by which it is bound or contravenes any
Connecticut or United States applicable law governing the banking or trust
powers of the Owner Trustee, or any judgment or order in each case, known
to us applicable to or binding on it.
9. To our knowledge, there are no proceedings or actions pending
or threatened against or affecting the Owner Trustee, in its individual
capacity or as Owner Trustee, before any governmental authority which,
individually or in the aggregate, if adversely determined, would
materially and adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to enter into
or to perform its obligations under the Owner Trustee Documents or the
Certificates.
10. No consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Connecticut or United States governmental authority regulating the
banking or trust powers of the Owner Trustee, in its individual capacity,
is required for the execution and delivery of, or the carrying out by, the
Owner Trustee in its individual capacity or as Owner Trustee, as the case
may be, of any of the transactions contemplated by the Owner Trustee
Documents, other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained, given or taken.
11. There are no fees, taxes or other charges payable by the
Owner Trustee, the Trust Estate or the trust created by the Trust
Agreement imposed by the State of Connecticut or any political subdivision
or taxing authority thereof in connection with the execution, delivery and
performance by State Street, individually or as Owner Trustee, of the
Owner Trustee Documents (other than franchise or other taxes based on or
measured by any fees or compensation received by State Street, acting as
the Owner Trustee, for services rendered in connection with the
transactions contemplated by the Operative Agreements) and, assuming that
the trust created by the Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust under
subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, (i) such trust will not be subject to any fees, taxes or other
charges imposed by the State of Connecticut or any political subdivision
thereof based on income, receipts, value or otherwise, (ii) Holders that
are not residents of or otherwise subject to tax in Connecticut will not
be subject to any taxes imposed by the State of Connecticut or any
political subdivision thereof as a result of purchasing, holding
(including receiving payments with respect to) or selling a Certificate
and (iii) assuming the Owner Participant is not a Connecticut resident or
otherwise subject to tax in Connecticut and further assuming that the
assets of the trust created by the Trust Agreement are not deemed to be
located in Connecticut, the Owner Participant will not be subject to any
taxes imposed by the State of Connecticut or any political subdivision
thereof solely as a result of being the beneficial owner of the trust
created by the Trust Agreement.
12. The Owner Trustee has received such title to the Aircraft as
has been conveyed to it subject to the rights of the Owner Trustee and the
Lessee under the Lease and the security interest created pursuant to the
Indenture and the Lease; and to our knowledge, there exist no liens or
encumbrances affecting the right, title and interest of the Owner Trustee
in and to the Trust Estate resulting from claims against State Street not
related to the ownership of the Trust Estate or any other transaction
contemplated by the Operative Agreements.
13. All the properties which are part of the Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture) have been pledged and mortgaged
with the Indenture Trustee as part of the Indenture Estate, and the
beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the
Indenture, to the liens of the Indenture in favor of the Holders from time
to time of the Certificates.
14. Neither a Connecticut court nor a Federal court applying
federal law or Connecticut law, if properly presented with the issue and
after having properly considered such issue, would permit the Owner
Participant to terminate the Trust Agreement, except as otherwise provided
therein, until the Lien of the Indenture on the Indenture Estate has been
released and until payment in full of the principal of, and premium, if
any, and interest on, the Certificates and all other sums due the Holders
of the Certificates have been made.
15. Under the laws of the State of Connecticut, as long as the
Trust Agreement has not been terminated in accordance with its terms,
creditors of any person that is an Owner Participant, holders of a lien
against the assets of any such person and representatives of creditors of
any such person, such as trustees, receivers or liquidators (whether or
not any insolvency proceeding has been commenced) (collectively the
"Creditors") may acquire legal, valid and enforceable claims and liens, as
to the Trust Estate, only against the beneficial interest of such person
in the Trust Estate, and do not have, and may not through the enforcement
of such Creditors' rights acquire, any other legal, valid, and enforceable
claim or lien against the Trust Estate.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
August ___, 1998
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Pass Through Trust Agreement dated as of May 1, 1997 (the "Pass
Through Trust Agreement"), as supplemented by the Series Supplements dated July
7, 1998 between Federal Express Corporation and First Security, not in its
individual capacity, except as otherwise stated, but solely as Pass Through
Trustee, designated as Series Supplement 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee and Initial Owner Participant,
Cessna Finance Corporation, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as otherwise stated, but solely as Owner Trustee, and First Security,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to
the Participation Agreement, one Airbus A300F4-605R aircraft bearing U.S.
Registration No. N677FE (the "Aircraft") is being financed. This opinion is
furnished pursuant to Section 4.01(d)(vi) of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
the Participation Agreement, except that references herein to any instrument
shall mean such instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Pass Through Trust Agreement;
(b) The Series Supplements;
(c) The Pass Through Certificates;
(d) The Participation Agreement;
(e) The Intercreditor Agreement; and
(f) Each Liquidity Facility.
(Each of the documents identified in paragraphs (a) through (e) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) are being collectively
referred to as the "Subordination Agent Documents".)
We have also examined originals or copies of such other
documents, corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Pass Through Trustee Documents
or the Subordination Agent Documents, as the case may be.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
With respect to the opinions set forth in paragraph 8 below, with
your permission we have relied upon, and this opinion is limited by, the
assumptions set forth in the discussion entitled "Certain Utah Taxes" in the
Prospectus Supplement to the Prospectus forming part of Registration Number No.
333-49411 (the "Registration Statement") for the registration of the Pass
Through Certificates with the Securities and Exchange Commission. We express
no opinion as to the correctness of the foregoing assumptions and we have
conducted no independent investigation in this regard.
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national banking
association, with banking and trust powers.
2. Each of First Security, the Pass Through Trustee and the
Subordination Agent, as the case may be, has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform each of the Pass Through Trustee Documents
and the Subordination Agent Documents, as the case may be, and to
authenticate the Pass Through Certificates delivered on the Certificate
Closing Date.
3. Each of First Security, the Pass Through Trustee and the
Subordination Agent has duly authorized, executed and delivered each Pass
Through Trustee Document or Subordination Agent Document, as the case may
be; each such document constitutes a legal, valid and binding obligation
of the Pass Through Trustee or the Subordination Agent, as the case may be
(and, to the extent set forth in the respective Pass Through Trustee
Document or Subordination Agent Document, of First Security) enforceable
against the Pass Through Trustee or the Subordination Agent, as the case
may be (and, to the extent set forth in the respective Pass Through
Trustee Document or Subordination Agent Document, against First Security)
in accordance with its terms.
4. The Pass Through Certificates issued and dated the
Certificate Closing Date have been duly authorized and validly executed,
issued, delivered and authenticated by the Pass Through Trustee pursuant
to the Pass Through Trust Agreement and the Series Supplements; and the
Pass Through Certificates acquired by the Underwriters under the
Underwriting Agreement are enforceable against the Pass Through Trustee
and are entitled to the benefits of the related Pass Through Trust
Agreement and the related Series Supplements.
5. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Utah or Federal governmental authority
governing the banking or trust powers of First Security, the Pass Through
Trustee or the Subordination Agent, and no filing, recording, publication
or registration in any public office is required under Utah or Federal law
pertaining to its banking or trust powers for the due execution, delivery
or performance by First Security, individually or as Pass Through Trustee
or Subordination Agent, as the case may be, of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) or the
Subordination Agent Documents, as the case may be, and of the certificate
of authentication, as Pass Through Trustee, on the Pass Through
Certificates, or for the legality, validity, binding effect or
enforceability thereof against First Security, the Pass Through Trustee or
the Subordination Agent, as the case may be.
6. The execution, delivery and performance by the Pass Through
Trustee or First Security, as the case may be, of each of the Pass Through
Documents and the Subordination Agent or First Security, as the case may
be, of each of the Subordination Agent Documents, and the issuance,
execution, delivery and performance of the Pass Through Certificates by
the Pass Through Trustee are not or were not, on the date of execution
thereof, in violation of the charter or by-laws of First Security or of
any law, governmental rule, or regulation of the State of Utah or the
United States of America governing the banking or trust powers of First
Security or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or
other agreement or instrument to which it is a party or by which it is
bound or, to our knowledge, of any judgment or order of the State of Utah
or the United States of America relating to the banking or trust powers of
First Security.
7. To our knowledge, there are no actions, suits, investigations
or proceedings pending or threatened against or affecting First Security,
the Pass Through Trustee or the Subordination Agent or any of its
properties in any court or before any administrative agency or arbitrator,
which, if adversely determined, would materially adversely affect the
ability of First Security, the Pass Through Trustee or the Subordination
Agent, as the case may be, to perform its obligations under any of the
Pass Through Trustee Documents or the Subordination Agent Documents, as
the case may be, and to our knowledge, there are no pending or threatened
actions or proceedings before any court, administrative agency or tribunal
involving First Security, the Pass Through Trustee or the Subordination
Agent in connection with the transactions contemplated by any of the Pass
Through Trustee Documents or the Subordination Agent Documents, as the
case may be.
8. Neither the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee, in its
individual or trust capacity, as the case may be, nor the Owner
Participant, nor the Owner Trustee, nor their respective Affiliates,
successors or assigns, will be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), governmental fee or
other similar charge under the laws of the State of Utah or any political
subdivision thereof (other than taxes imposed on the fees received by
First Security for acting as Pass Through Trustee under the Series
Supplements). Certificate holders who are not residents of or otherwise
subject to tax in Utah will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), governmental fee or
other similar charge under the laws of the State of Utah or any political
subdivision thereof as a result of purchasing, owning (including receiving
payments with respect to) or selling a Pass Through Certificate. There
are no applicable taxes under the laws of the State of Utah or any
political subdivision thereof upon or with respect to (a) the
construction, mortgaging, financing, refinancing, purchase, acquisition,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, insurance, control, assembly, possession, repossession,
operation, use, condition, maintenance, repair, sale, return, abandonment,
replacement, preparation, installation, storage, redelivery, manufacture,
leasing, subleasing, modification, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of the Aircraft or any interest in any thereof, (b) payments
of Rent or other receipts, income or earnings arising therefrom or
received with respect to the Aircraft or any interest in any thereof or
payable pursuant to the Lease, (c) any amount paid or payable pursuant to
any Operative Agreements, (d) the Aircraft or any interest therein or the
applicability of the Lease to the Aircraft or any interest in any thereof,
(e) any or all of the Operative Agreements, any or all of the Pass Through
Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification,
assumption, reissuance, refinancing or refunding of any or all thereof,
and any other documents contemplated thereby and amendments or supplements
hereto and thereto, (f) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to, any or all of the
Pass Through Certificates, whether as originally issued or pursuant to any
refinancing, refunding, assumption, modification or reissuance, or any
other obligation evidencing any loan in replacement of the loan evidenced
by any or all of the Pass Through Certificates, or (g) otherwise with
respect to or in connection with the transactions contemplated by the Pass
Through Trust Agreement, the Series Supplements, the Pass Through
Certificates and the Operative Agreements, which would not have been
imposed if the Pass Through Trustee had not had its principal place of
business in, had not performed (either in its individual capacity or as
Pass Through Trustee) any or all of its administrative duties under the
Pass Through Trust Agreement, the Series Supplements, the Pass Through
Certificates and the Operative Agreements in, and had not engaged in any
activities unrelated to the transactions contemplated by the Pass Through
Trust Agreement, the Series Supplements, the Pass Through Certificates and
the Operative Agreements in, the State of Utah.
9. Each of the Certificates to be delivered to and registered in
the name of the Subordination Agent on the date hereof pursuant to the
Participation Agreement and the Intercreditor Agreement will be held by
the Subordination Agent in trust for the Pass Through Trustee under the
applicable Pass Through Trust Agreement.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the banking
and trust powers of First Security. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) Title 49 of the United States Code
Annotated (previously known as the Federal Aviation Act of 1958), as
amended and (iii) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in the State of Utah of the
Certificates and the other Pass Through Trustee Documents expressed to be
governed by the laws of the State of New York, we have assumed that the laws of
New York are identical to the laws of Utah in all material respects, and that
the Certificates and such Pass Through Trustee Documents constitute legal,
valid, binding and enforceable documents or instruments under such laws (as to
which we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument, are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery
by each of the parties thereto, other than First Security and the Pass Through
Trustee, of the Pass Through Trustee Documents to which each is a party and
that each of such parties has the full power, authority and legal right to
execute and deliver each such document.
D. We have assumed that all signatures (other than those of the
Pass Through Trustee or First Security) on documents and instruments examined
by us are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
as copies conform with the originals, which facts we have not independently
verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(6)
[Letterhead of General Electric Company]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Reference is made to (i) that certain Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Participation Agreement") by
and among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), Cessna Finance Corporation, as Owner Participant, State Street Bank
and Trust Company of Connecticut, National Association ("SSB") (not in its
individual capacity, except as otherwise expressly set forth therein, but
solely as Owner Trustee), and First Security Bank, National Association ("FSB")
(not in its individual capacity, except as otherwise expressly set forth
therein, but solely as Indenture Trustee, Pass Through Trustee and
Subordination Agent); (ii) that certain Purchase Agreement Assignment (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998 (the
"Purchase Agreement Assignment") between Fed Ex, as Lessee and SSB, as Lessor;
(iii) that certain Lease Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Lease") between SSB (not in its individual capacity, but solely as
Owner Trustee), as Lessor and Fed Ex, as Lessee; (iv) that certain Trust
Indenture and Security Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Indenture") between SSB (not in its individual capacity), as
Owner Trustee and FSB (not in its individual capacity), as Indenture Trustee;
and (v) that certain Trust Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Agreement") between SSB (not in its individual capacity), as
Owner Trustee and Cessna Finance Corporation, as Trustor.
I am an attorney employed by General Electric Company, a New York
corporation (the "Engine Manufacturer"), and as such have acted as counsel for
the Engine Manufacturer in connection with the execution and delivery by the
Engine Manufacturer of the Consent (the "Consent"), and the Engine Warranty
Assignment (Federal Express Corporation Trust No. N677FE) (the "Engine Warranty
Assignment"). The Consent and the Engine Warranty Assignment covers two GE
CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
705-266 and 705-267, respectively. In this connection, I have, or an attorney
under my supervision has, reviewed such documents as I have deemed necessary
for the purpose of this opinion, including, but without limiting the generality
of the foregoing, the General Terms Agreement No. 6-9034, dated as of July 3,
1991 between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), the Engine Product Support Plan forming a part thereof (the
"Engine Product Support Plan"), the Participation Agreement, the Purchase
Agreement Assignment, the Lease, the Trust Indenture and the Trust Agreement.
In making such examinations, I have relied upon the accuracy of
original, certified, conformed, photocopied or telecopied copies of such
records, agreements, certificates and other documents as I have deemed
necessary or appropriate to enable me to render the opinions expressed herein.
In all such examinations, I have assumed the genuineness of signatures on
original documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by public
officials, I have assumed the same to have been properly given and to be
accurate. As to various questions of fact material to such opinions, I have
relied, when such relevant facts were not independently established by me,
solely upon the accuracy of the statements, representations and warranties made
in the Participation Agreement, the Purchase Agreement Assignment, the Lease,
the Trust Indenture and the Trust Agreement.
With your consent, and for the purposes of this opinion, I have
assumed (other than with respect to the Engine Manufacturer), the accuracy of
the following matters, but I have not made any independent investigation or
inquiry with respect thereto and I render no opinion on such matters:
(a) each of the Participation Agreement, the Purchase
Agreement Assignment, the Lease, the Trust Indenture, and the Trust
Agreement have been duly and validly authorized, executed and delivered by
all parties thereto and constitutes the legal, valid and binding
obligations of each of such parties in accordance with the respective
terms thereof; and
(b) the respective parties to the Participation Agreement,
the Purchase Agreement Assignment, the Lease, the Trust Indenture, and the
Trust Agreement have obtained, and there are in full force and effect, any
and all federal, state, local or foreign governmental agencies and
authorities in connection with the transactions contemplated thereby, to
the extent necessary for the legality, validity and binding effect or
enforceability of the Consent and the Engine Warranty Assignment.
Based upon the foregoing, and subject to the specific
assumptions, qualifications and reliances herein set forth, and on the basis of
my consideration of such facts and law as I have deemed necessary for purposes
of this letter, it is my opinion that:
(1) The Engine Manufacturer has the full corporate power,
authority and the legal right to enter into and perform its obligations
under the General Terms Agreement, the Consent and the Engine Warranty
Assignment. The execution, delivery and performance by the Engine
Manufacturer of each of the General Terms Agreement, the Consent and the
Engine Warranty Assignment was duly authorized by all necessary corporate
action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement, the Consent and
Engine Warranty Assignment has been duly authorized, executed and
delivered by and constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the respective terms thereof, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equity principles.
(3) The Engine Product Support Plan insofar as it relates to
the Engine Warranties (as such term is defined in the Engine Warranty
Assignment), constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the terms thereof, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
by general equity principles.
The foregoing opinions are limited to the laws of the State of
Ohio and the federal laws of the United States of America, but no opinion is
expressed as to matters governed by the Transportation Code (Title 49 of the
United States Code), as amended, or by any other law, statute, rule or
regulation of the United States relating to the acquisition, ownership,
registration, use, operation, maintenance, repair, replacement or sale of
aircraft. Further, no opinion is expressed as to title to any engines or other
property.
This opinion is furnished by me at your request for your sole
benefit and no other person or entity shall be entitled to rely on this opinion
without our express written consent. My opinion is limited to the matters
stated herein and no opinion is implied or may be inferred beyond the matters
expressly stated herein.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(7)
[Letterhead of Clifford Chance]
August ___, 1998
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We are special French counsel for Airbus Industrie G.I.E.
("Airbus") and AVSA S.A.R.L. ("AVSA") and you have asked for our opinion in
connection with certain transactions contemplated in the Participation
Agreement (Federal Express Corporation Trust No. N677FE), dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Participation
Agreement") among Federal Express Corporation, as Lessee and Initial Owner
Participant ("Federal Express"), Cessna Finance Corporation, as Owner
Participant ("Owner Participant"), State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
otherwise expressly stated therein, but solely as Owner Trustee ("Owner
Trustee"), and First Security Bank, National Association, not in its individual
capacity, except as otherwise expressly stated therein, but solely as Indenture
Trustee (the "Indenture Trustee"), Pass Through Trustee and Subordination
Agent, and relating to the Aircraft to be operated by Federal Express.
This opinion is being delivered pursuant to Section 4.01(d)(viii)
of the Participation Agreement.
Capitalized terms used in this opinion and not otherwise defined
shall have the meaning assigned thereto in the Participation Agreement.
We have examined:
(a) a copy of an Airbus A300-600R Freighter Purchase Agreement dated
as of July 3, 1991 and made between AVSA and Federal Express with
an executed Consent and Guaranty of Airbus of same date attached
thereto, sent to us by facsimile by AINA Holdings Inc. ("AINA")
on April 27, 1994;
(b) a copy sent to us by courier by Davis Polk & Wardwell on
________________ of an executed Purchase Agreement Assignment
dated as of August 1, 1998 (the "Purchase Agreement Assignment")
made between Federal Express and the Owner Trustee;
(c) a copy sent to us by facsimile by AVSA on _________________ of an
executed Airbus Industrie Consent and Agreement to the Purchase
Agreement Assignment dated as of August 1, 1998;
(d) a copy sent to us by facsimile by AVSA on _________________ of an
executed but undated AVSA Consent and Agreement to the Purchase
Agreement Assignment dated as of August 1, 1998;
(e) a form of Warranty Bill of Sale sent to us by facsimile by AVSA
on _________________, relating to the Aircraft and transferring
title therein from AVSA to the Owner Trustee ("AVSA Warranty Bill
of Sale"), which we assume conform to the execution version;
(f) a form of Airbus Industrie G.I.E. Warranty sent to us by
facsimile by AVSA on _________________, in favour of the
Participants (the "Airbus Warranty") warranting AVSA's Warranty
Bill of Sale, which we assume conform to the execution version;
(g) a copy sent to us by facsimile by AVSA on _________________ of an
undated FAA Bill of Sale executed by AVSA in favour of the Owner
Trustee;
(h) a copy sent to us by courier by AVSA on June 11, 1998 of an
executed power of attorney dated April 1, 1998 appointing Messrs
X. de Rouville and J.C Mauries as attorneys-in-fact of Mr. Jean
Pierson, Managing Director ("Administrateur Grant") of Airbus;
and
(i) a copy sent to us by courier by AVSA on August 18, 1998 of an
executed power of attorney dated April 18, 1998 appointing Jean
Margail, as attorney-in-fact of Mr. Christophe Mourey, Chief
Executive Officer ("Grant") of AVSA.
The documents referred to in paragraphs (a) to (i) above shall be referred to
herein below as the "Documents".
Based on the foregoing, and such other documents, records and
other instruments as we have deemed necessary or appropriate for the purpose of
this opinion, and assuming the Documents to have been duly executed by the
parties thereto (other than Airbus and AVSA), the genuineness of all signatures
and the completeness and conformity to the originals of all documents supplied
to us as copies or as facsimiles, we are of the opinion that, subject to the
qualifications set out below:
1. Airbus is a groupement d'interet economique duly organized and
existing under the laws of the French Republic, and has the power
and authority to carry on its business as now conducted. The
present members of Airbus are (i) Arospatiale, Socit Nationale
Industrielle, (ii) Daimler-Benz Aerospace Airbus GmbH, (iii)
British Aerospace (Operations) Ltd. and (iv) Construcciones
Aeronauticas S.A., and each of such corporations is, without the
need to proceed against any collateral security for the
indebtedness of Airbus or to take any other legal action or
process (except for service on Airbus by huissier of notice to
perform and subsequent failure by Airbus to do so), jointly and
severally liable with the other members for the debts of Airbus
arising out of obligations contracted by Airbus while such
corporation is a member of Airbus.
2. AVSA is a societe a responsabilite limitee duly established and
existing under the laws of the French Republic and has the power
and authority to carry on its business as now conducted.
3. Each of Airbus and AVSA has full power and authority to enter
into and to execute, deliver and perform its obligations under
those of the Documents to which it is a party; such obligations
are legal, valid and binding upon them respectively, are
enforceable in accordance with their respective terms and rank
pari passu with the other unsecured obligations of Airbus or
AVSA, as the case may be.
4. All actions, authorizations, approvals, consents, conditions and
things required at law to be taken, fulfilled and done to
authorize the execution, delivery and performance by Airbus and
AVSA of those of the Documents to which they respectively are
party have been taken, obtained, fulfilled and done; and no
consents under any exchange control, laws, rules or regulations
of the French Republic are necessary in connection therewith.
5. Neither the execution and delivery and performance of the
Documents to which Airbus and AVSA respectively are a party, nor
the consummation of the transactions contemplated thereby,
contravenes or violates any law, governmental rule or regulation
applicable to or binding on Airbus or AVSA.
6. The choice of the laws of the State of New York to govern the
Documents (which are expressed to be so governed) is valid under
the laws of the French Republic, and a French court would uphold
such choice of law in any suit on the Documents brought in a
French court.
7. Under the laws of the French Republic, Airbus and AVSA are
subject to private commercial law and to suit, and neither Airbus
nor AVSA nor their respective properties have any immunity from
the jurisdiction of any court or any legal process (whether
through service of notice, attachment prior to notice, attachment
prior to judgment, attachment in aid of execution, execution or
otherwise), except that:
(a) to the extent that Airbus or AVSA occupies or possesses
any property by virtue of any license or grant from the
French State, such property and the title of Airbus or
AVSA thereto may be immune from suit or execution on the
grounds of sovereignty; and
(b) suit and execution against Airbus or AVSA or their
respective property may be affected by action taken by
the French public authorities in the interests of
national defence or on the occurrence of exceptional
circumstances of paramount importance to the national
interest of France, as such concept is understood under
the Constitution, laws and regulations of France.
8. No French value added tax is due upon the transfer of title of
the Aircraft from AVSA to State Street Bank and Trust Company of
Connecticut, National Association as Owner Trustee.
9. In connection with the obligations of Airbus and AVSA under the
Documents, this opinion must be read subject to the following
qualifications and observations as to French law:
(a) the remedy of specific performance may not be available
in a French court;
(b) the enforcement against Airbus of any of the Documents to
which it is a party may be limited by applicable
bankruptcy, insolvency, arrangement, moratorium or
similar laws relating to or affecting the enforcement of
creditors' rights generally, as such laws are applied to
Airbus. The enforcement against AVSA of any of the
Documents to which it is a party may be limited by such
laws, as such laws are applied to AVSA. The enforcement
against any member of Airbus of any obligation of Airbus
contained in the Documents may be limited by such laws,
as such laws are applied to such member;
(c) in respect of payment obligations, a French court has
power under Article 1244-1 of the French Civil Code to
grant time to a debtor (not in excess of two years),
taking into account the position of the debtor and the
needs of the creditor;
(d) in order to ensure the validity as against third parties
of the assignment made in the Purchase Agreement
Assignment, it is necessary that notice of such
assignment be served on Airbus and AVSA by "huissier" in
accordance with the provisions of Article 1690 of the
French Civil Code;
(e) in the event of any proceedings being brought in a French
court in respect of a monetary obligation expressed to be
payable in a currency other than French Francs, a French
court would probably give judgment expressed as an order
to pay, not such currency, but its French Franc
equivalent at the time of payment or enforcement of
judgment. With respect to a bankruptcy, insolvency,
liquidation, moratorium, reorganization, reconstruction
or similar proceedings, French law may require that all
claims or debts be converted into French Francs at an
exchange rate determined by the court at a date related
thereto, such as the date of commencement of a
winding-up;
(f) a determination or certificate as to any matter provided
for in the Documents might be held by a French court not
to be final, conclusive or binding, if such determination
or certificate could be shown to have an unreasonable,
incorrect or arbitrary basis or not to have been given or
made in good faith;
(g) claims may become barred by effluxion of time or may be
or become subject to defence of set-off or counterclaim;
(h) provisions in any Document providing that it or any other
Documents may be amended or varied or any provision
thereof waived only by an instrument in writing may not
be effective;
(i) a French court may stay proceedings if concurrent
proceedings are being brought elsewhere;
(j) we express no opinion as to whether any provision in the
Documents conferring a right of set-off or similar right
would be effective against a liquidator or a creditor;
(k) our opinion as to the enforceability of the Documents
relates only to their enforceability in France in
circumstances where the competent French court has and
accepts jurisdiction. The term "enforceability" refers
to the legal character of the obligations assumed by the
parties under the documents, i.e., that they are of a
character which French law enforces or recognizes. It
does not mean that the Documents will be enforced in all
circumstances or in foreign jurisdictions or by or
against third parties or that any particular remedy will
be available; and
(l) article 899 of the French Tax Code provides that
agreements evidencing an undertaking to pay a sum of
money are subject to stamp tax (droit de timbre) of a
nominal amount if made in the French Republic, if made in
a foreign country, such agreements are subject to a stamp
tax of a nominal amount before certain use thereof can be
made in the French Republic (Article 897 of the French
Tax Code). However non-payment of such stamp tax does not
affect the legality, validity or enforceability of the
agreements.
In rendering the foregoing opinions, we have assumed that the
Documents (expressed to be governed by New York law) constitute the legal,
valid and binding obligations of the parties under New York law.
We are qualified as French Avocats.
No opinion is expressed herein as to laws other than the laws of
the French Republic as of the date hereof. This opinion is for your use and
that of no one else, and is limited to (i) the matters specifically mentioned
herein, and (ii) the purpose set out above.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT A(8)
[Letterhead of Daugherty, Fowler & Peregrin]
August ___, 1998
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(d)(ix)
of the Participation Agreement (Federal Express Corporation Trust No. N677FE),
dated as of June 15, 1998, as amended and restated as of August 1, 1998 (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant (the "Owner Participant"), State Street Bank and Trust Company of
Connecticut, National Association, as Owner Trustee (the "Owner Trustee"),
First Security Bank, National Association, as Indenture Trustee (the "Indenture
Trustee"), First Security Bank, National Association, as Pass Through Trustee
(the "Pass Through Trustee") and First Security Bank, National Association, as
Subordination Agent (the "Subordination Agent"), with respect to that portion
of Subtitle VII of Title 49 of the United States Code relative to the
recordation of instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated August ___,
1998 (the "FAA Bill of Sale") from AVSA S.A.R.L., as
seller, conveying title to the Airframe to the Owner
Trustee, which FAA Bill of Sale was filed at ____ _.m.,
C._.T.;
(b) AC Form 8050-1 Aircraft Registration Application dated
August ___, 1998 (the "Aircraft Registration
Application") by the Owner Trustee, as applicant,
covering the Airframe, which Aircraft Registration
Application was filed at ____ _.m., C._.T.;
(c) Affidavit of the Owner Trustee dated August ___, 1998
(the "Owner Trustee Affidavit") pursuant to Section
47.7(c)(2)(ii) of Part 47 of the Federal Aviation
Regulations together with Affidavit of the Owner
Participant dated August ___, 1998 (the "Owner
Participant Affidavit") attached thereto, which Owner
Trustee Affidavit with the Owner Participant Affidavit
attached was filed at ____ _.m., C._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998,
as amended and restated as of August 1, 1998 (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N677FE)
dated as of June 15, 1998, as amended and restated as of
August 1, 1998 (the "Trust Indenture") between the Owner
Trustee and the Indenture Trustee, with executed
counterpart of Indenture and Security Agreement
Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) dated August ___, 1998 (the "Trust Indenture
Supplement") by the Owner Trustee, covering the Aircraft,
attached thereto, which Trust Indenture with the Trust
Indenture Supplement attached was filed at ____ _.m.,
C._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998,
as amended and restated as of August 1, 1998 (the
"Lease") between the Owner Trustee, as lessor, and the
Lessee, with executed counterparts of the following
attached thereto: (i) Lease Supplement No. 1 (Federal
Express Corporation Trust No. N677FE) dated August ___,
1998 (the "Lease Supplement") between the Owner Trustee,
as lessor, and the Lessee, covering the Aircraft; (ii)
the Trust Indenture; and (iii) the Trust Indenture
Supplement, which Lease with the foregoing attachments
(collectively, the "Lease Attachments") attached was
filed at ____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the
FAA filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the
Lease Attachments attached are in due form for
recordation by and have been duly filed for recordation
with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached
and the Trust Agreement are in due form for filing and
have been duly filed with the FAA pursuant to and in
accordance with the provisions of 49 U.S.C. Section
44103(a) and Section 47.7(c) of the Federal Aviation
Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit
with the Owner Participant Affidavit attached and the
Trust Agreement will cause the FAA to register the
Airframe, in due course, in the name of the Owner Trustee
and to issue to the Owner Trustee an AC Form 8050-3
Certificate of Aircraft Registration for the Airframe,
and the Airframe will be duly registered pursuant to and
in accordance with the provisions of 49 U.S.C. Section
44103(a);
4. the Owner Trustee has valid legal title to the Airframe
and the Aircraft is free and clear of all Liens, except
(i) the security interest created by the Trust Indenture,
as supplemented by the Trust Indenture Supplement, and
(ii) the rights of the parties under the Lease, as
supplemented by the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with
respect to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust
Indenture Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly
perfected first assignment of all the right, title and
interest of the Owner Trustee in, to and under the Lease
and the Lease Supplement (insofar as such assignment
affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section
44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been
duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such
security interest and assignment (insofar as such
assignment affects an interest covered by the recording
system established by the FAA pursuant to 49 U.S.C.
Section 44107), it being understood that no opinion is
herein expressed as to the validity, priority or
enforceability of such security interest and assignment
under local law or as to the recognition of the
perfection of such security interest and assignment as
against third parties in any legal proceeding outside the
United States;
7. no authorization, approval, consent, license or order of,
or registration with, or the giving of notice to, the FAA
is required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties
thereto of the Trust Agreement, the Trust Indenture, the
Trust Indenture Supplement, the Participation Agreement,
the FAA Bill of Sale, the Lease and the Lease Supplement
or the performance by the parties thereto of: (i) the
Trust Agreement; (ii) the Trust Indenture, as
supplemented by the Trust Indenture Supplement; (iii) the
Participation Agreement; and (iv) the Lease, as
supplemented by the Lease Supplement, in accordance with
the provisions thereof, nor the consummation by the
parties thereto of any of the transactions contemplated
thereby, requires the consent or approval of, or the
giving of notice to, the registration with or the taking
of any other action in respect of, the FAA except for the
filings and the recordations specified elsewhere in this
opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have actual notice.
In rendering this opinion we are assuming that there are no documents with
respect to the Aircraft which have been filed for recording under the recording
system of the FAA but have not yet been listed in the available records of such
system as having been so filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated _____________, a copy
of which is attached hereto.
Very truly yours,
Annex I
Certain Definitions
-------------------
Airframe, Engines and Aircraft
------------------------------
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 791 and U.S. Registration No. N677FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-266 and 705-267 (the "Engines") (the Airframe
and the Engines are referred to collectively as the "Aircraft").
Confidential Omissions
----------------------
The Lease was filed with the FAA, with (i) Basic Rent (Schedule
II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination
Values (Schedule IV) and (iv) the Purchase Option Schedule (Schedule V) omitted
from the FAA filing counterpart thereof as containing confidential financial
information; and (v) the purchase price under Section 4.02(a)(F) of the Lease
set forth in Ancillary Agreement I, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
The Trust Indenture was filed with the FAA, with Schedule I
(Schedule of Principal Payments) intentionally omitted from the FAA filing
counterpart thereof as containing confidential financial information.
SCHEDULE A
----------
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
Cessna Finance Corporation
Owner Participant Guarantor
- ---------------------------
Textron Financial Corporation
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4. of this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 1. of this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 3. of this Form 8K]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
PURCHASE AGREEMENT ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST
NO. N677FE), dated as of August 1, 1998, between FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Assignor" or "Lessee"), and STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee ("SSB"
or the "Lessor") under the Trust Agreement (Federal Express Corporation Trust
No. N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (as amended, modified or supplemented from time to time, the "Trust
Agreement"), between CESSNA FINANCE CORPORATION (the "Owner Participant") and
SSB.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are
parties to the Purchase Agreement (as hereinafter defined), providing, among
other things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the
Lessor will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents
and Agreements (as hereinafter defined), (a) the Assignor desires to assign to
the Lessor (i) the Assignor's right under the Purchase Agreement and the
Consent and Guaranty (insofar as it relates to the Purchase Agreement) to
purchase the Aircraft and (ii) certain of the Assignor's remaining rights,
title and interests in, to and under the Purchase Agreement and the Consent and
Guaranty (insofar as they relate to the Purchase Agreement and the Aircraft)
and (b) the Lessor desires to accept the assignments and, except as otherwise
provided herein, to assume the obligations of the "Buyer" under the Purchase
Agreement, to the extent assigned to it pursuant hereto; and
WHEREAS, pursuant to the Indenture (as hereinafter defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as hereinafter defined) to the extent set forth therein; and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and
deliver their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment,
except as otherwise expressly provided or unless the context otherwise
requires, the following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 791, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a
responsabilite limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and Agreement
of AVSA attached hereto, as amended, modified or supplemented from time to
time.
"Bill of Sale" shall mean the bill of sale for the Aircraft to be
delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of the
Guarantor attached to the Purchase Agreement, together with all
amendments, waivers, and consents heretofore entered into or heretofore
granted thereunder and delivered to the Lessor.
"Consents and Agreements" shall mean the AVSA Consent and
Agreement and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French
groupement d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and
Agreement of the Guarantor attached hereto, as amended, modified or
supplemented from time to time.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
as amended and restated as of August 1, 1998, between the Lessor and the
Indenture Trustee, as amended, modified or supplemented from time to time.
"Indenture Trustee" shall mean First Security Bank, National
Association, not in its individual capacity but solely as Indenture
Trustee under the Indenture and each other person which may from time to
time be acting as successor trustee under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Lessor and the Assignor, as
amended, modified or supplemented from time to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
as amended and restated as of August 1, 1998, among the Assignor, the
Initial Owner Participant (as defined therein), the Owner Participant, the
Pass Through Trustee (as defined therein), the Lessor, the Indenture
Trustee and the Subordination Agent (as defined therein), as amended,
modified or supplemented from time to time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto and
all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are defined
in the Lease shall, when used herein, have the meanings specified in the Lease.
2. Assignment. (a) Generally. The Assignor has sold,
assigned, transferred and set over and does hereby sell, assign, transfer and
set over unto the Lessor (i) the right upon valid tender of the Aircraft by
AVSA in accordance with the Purchase Agreement to purchase the Aircraft
pursuant to the Purchase Agreement for the amount specified in the invoice in
respect thereof to be delivered by AVSA on the Delivery Date therefor
(including, without limitation, the right to accept delivery of the Aircraft
through an appointed representative which may be an employee of the Assignor)
and the right to be named the "Buyer" in the Bill of Sale and the right to
enforce the same under the Consent and Guaranty, (ii) the right to take and
hold the Aircraft and (iii) all of the Assignor's other right, title and
interest in and to the Purchase Agreement and the Consent and Guaranty (insofar
as it relates to the Purchase Agreement), as and to the extent that the same
relates to the Aircraft and, except to the extent reserved below, the operation
of the Aircraft, including, without limitation, in such assignment to the
Lessor (A) all claims for damages in respect of such Aircraft arising as a
result of any default by AVSA under the Purchase Agreement, or by any vendor or
other supplier of aircraft engines or other parts or equipment installed on or
in the Aircraft, including, without limitation, all warranty, service life
policy and indemnity provisions in the Purchase Agreement in respect of the
Aircraft and all claims thereunder and under the Consent and Guaranty and (B)
any and all rights of the Assignor to compel performance of the terms of the
Purchase Agreement and the Consent and Guaranty in respect of the Aircraft,
including all warranty and indemnification provisions in the Purchase Agreement
and the Consent and Guaranty and claims thereunder with respect to the
Aircraft; reserving to the Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft other
than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement and the Consent and Guaranty relate
to any other matters not directly pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in respect of
the Aircraft under the Purchase Agreement or amounts credited or to be
credited or paid or to be paid by the Guarantor or AVSA to the Assignor in
respect of the Aircraft or otherwise (except amounts credited with respect
to warranty claims to the extent set forth in Section 2(b) hereof) as of
the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data and
service provided under Clauses 12 and 13 of the Purchase Agreement, that
AVSA and the Guarantor are obligated to provide or do provide pursuant to
the Purchase Agreement and the Consent and Guaranty, respectively, with
respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the same
relates to specification changes, performance and operation pertaining to
the Aircraft, other than sub-Clause 2.1 and Clauses 12 and 13 of the
Purchase Agreement and under the Consent and Guaranty to the extent
relating thereto,
(5) the right to obtain services, training, data and demonstration and
test flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's plant
pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter
agreements, as at any time amended, modified or supplemented, to the
Purchase Agreement, and under the Consent and Guaranty to the extent
relating thereto; provided, however, that the reservation set forth in
this Section 2(a)(7) shall not in any way limit the rights of the Lessor
arising under Sub-clause 2.1 and Clauses 12 and 13 of the Purchase
Agreement.
(b) Assignment of Rights. If and so long as there shall not
exist and be continuing an Event of Default, the Lessor hereby authorizes the
Lessee, to the exclusion of the Lessor, to exercise in the Lessee's name all
rights and powers of the "Buyer" under the Purchase Agreement and to retain any
recovery or benefit resulting from the enforcement of any warranty or indemnity
in respect of the Aircraft, except that the Lessee may not enter into any
change order or other amendment, modification or supplement to the Purchase
Agreement without the written consent or countersignature of the Lessor if such
change order, amendment, modification or supplement would result in any
rescission, cancellation or termination of the Purchase Agreement in respect of
the Aircraft or in any way limit the rights of the Lessor arising under Clauses
12 and 13 of the Purchase Agreement or any of the other rights assigned
hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof
the Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, 2, Rond Point Maurice Bellonte, 31700 Blagnac,
France (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a)
Assignor Remains Liable. It is expressly agreed that, anything herein
contained to the contrary notwithstanding: (a) the Assignor shall at all times
remain liable to AVSA under the Purchase Agreement to perform all the duties
and obligations of the "Buyer" thereunder to the same extent as if this
Assignment had not been executed; (b) the exercise by the Lessor of any of the
rights assigned hereunder shall not release the Assignor from any of its duties
or obligations to AVSA under the Purchase Agreement except to the extent that
such exercise by the Lessor shall constitute performance of such duties and
obligations; and (c) except as provided in the next succeeding paragraph, none
of the Lessor, the Indenture Trustee nor any Participant shall have any
obligation or liability under the Purchase Agreement by reason of, or arising
out of, this Assignment or be obligated to perform any of the obligations or
duties of the Assignor under the Purchase Agreement or to make any payment or
to make any inquiry as to the sufficiency of any payment received by any of
them or to present or file any claim or to take any other action to collect or
enforce any claim for any payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the Purchase
Agreement, the Lessor confirms for the benefit of AVSA that, insofar as the
provisions of the Purchase Agreement relate to the Aircraft, in exercising any
rights under the Purchase Agreement, or in making any claim with respect to the
Aircraft or other goods and services delivered or to be delivered pursuant to
the Purchase Agreement, the terms and conditions of the Purchase Agreement
disclosed to the Lessor in writing shall apply to, and be binding upon, the
Lessor to the extent of its respective interests assigned hereunder to the same
extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained
herein shall (i) subject AVSA or the Guarantor to any liability to which it
would not otherwise be subject under the Purchase Agreement or (ii) modify in
any respect the contractual rights of AVSA or the Guarantor thereunder (except,
in each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have occurred
and be continuing, the Lessor and its successors and assigns to be the
Assignor's true and lawful attorney, irrevocably, with full power (in the name
of the Assignor or otherwise) to ask, require, demand, receive, compound and
give acquittance for any and all monies and claims for monies due and to become
due under, or arising out of, the Purchase Agreement and the Consent and
Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor, its
successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each
agree that, at any time and from time to time, upon the written request of any
other party hereto, it will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the
other may reasonably request in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants.
The Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally, and
the Assignor is not in default thereunder, and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease
is in effect, the Lessor agrees that it shall not enter into any agreement that
would amend, modify, supplement, rescind, cancel or terminate the Purchase
Agreement or the Consent and Guaranty in any respect or in any way limit the
rights of the Assignor arising under Clauses 12 and 13 of the Purchase
Agreement or any of the other rights assigned hereunder (except as set forth
above when there has been an Event of Default) without the prior written
consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by
the Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not
disclose to any third party the terms of the Purchase Agreement or this
Assignment, except (a) as required by applicable law or governmental
regulation, (b) as contemplated in the Lease or the Participation Agreement
(including as set forth in Section 18.01 of the Participation Agreement) or (c)
with the consent of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to
the assignment and pledge by the Lessor to the Indenture Trustee, as security
for the Certificates to be issued under the Indenture and the other obligations
secured thereby as specified in the Indenture, of all of the Lessor's right,
title and interest in and to the Purchase Agreement and the Consent and
Guaranty under this Assignment.
10. Counterparts. This Assignment may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters
contained herein shall be delivered in the manner and to the addresses provided
in Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Lessor
By ________________________________________
Name: Paul D. Allen
Title: Vice President
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment between
Federal Express Corporation, a Delaware corporation, and State Street Bank and
Trust Company of Connecticut, National Association, a national banking
association, not in its individual capacity, but solely as Lessor, with respect
to Federal Express Corporation Trust No. N677FE, dated as of August 1, 1998
(hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the Assignor
and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all
representations, warranties, and agreements of the Guarantor under the
Consent and Guaranty with respect to the Aircraft shall inure to the
benefit of the Lessor and its respective successors and assigns, to the
same extent as if the Lessor and its successors and assigns had originally
been named the "Buyer" of the Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled
to receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect
to the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by
AVSA to the Lessor, the assignment of Assignor's rights and interests
under the Purchase Agreement and the Consent and Guaranty to the Lessor
pursuant to the Assignment, the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and the lease of the Aircraft by the Lessor to the Assignor
under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to
the Purchase Agreement and payment in full for the Aircraft as described
in the Participation Agreement, the Guarantor will not assert any lien or
claim against the Aircraft or any part thereof or against the Lessee, the
Lessor, the Owner Participant or the Indenture Trustee arising on or prior
to such delivery or in respect of any work or services performed on or
prior thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic of
France and has the requisite power and authority to enter into and perform
its obligations under the Consent and Guaranty, the Airbus Guaranty and
this Consent and Agreement;
(B) the making and performance, in accordance with their terms
of the Consent and Guaranty, the Airbus Guaranty and this Consent and
Agreement have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require the consent or approval of the
members of the Guarantor, do not require the consent or approval of,or the
giving of notice to, or registration with, or the taking of any other
action in respect of, any French governmental authority or agency except
for those that have already been obtained and do not contravene any law
binding on the Guarantor or contravene the Guarantor's charter documents
or any indenture, credit agreement or other contractual agreement to which
the Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof
and at all times thereafter to and including the date of this Consent and
Agreement, and each of this Consent and Agreement and the Airbus Guaranty
constitutes, binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of August 1, 1998
AIRBUS INDUSTRIE G.I.E.
By _____________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite
limitee organized and existing under the laws of the Republic of France
("AVSA"), hereby acknowledges notice of and consents to all of the terms of the
Purchase Agreement Assignment between Federal Express Corporation, a Delaware
corporation, and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity,
but solely as Lessor, with respect to Federal Express Corporation Trust No.
N677FE, dated as of August 1, 1998 (hereinafter called the "Assignment", the
defined terms therein being hereinafter used with the same meaning), and hereby
confirms to the Assignor and the Lessor and their respective successors and
assigns that:
(i) except as provided in the Assignment, all
representations, warranties, indemnities and agreements of AVSA under the
Purchase Agreement with respect to the Aircraft shall inure to the benefit
of the Lessor and its respective successors and assigns to the same extent
as if the Lessor and its successors and assigns had originally been named
the "Buyer" of the Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be
paid by it under the Purchase Agreement, unless and until AVSA shall have
received written notice from the Indenture Trustee or the Lessor (or,
after the Indenture shall have been discharged in full, the Lessor)
addressed to it at the address and in the manner set forth in the
Assignment that an Event of Default has occurred and is continuing,
whereupon AVSA will make any and all payments thereafter required to be
made by it under the Purchase Agreement, to the extent that the right to
receive such payment has been assigned under the Assignment ("AVSA
Payments"), directly to the Indenture Trustee (or, after the Indenture
shall have been discharged in full, the Lessor) if AVSA shall have
received notice as aforesaid that an Event of Default has occurred and is
continuing;
(iii) The Lessor shall not be liable for any of the obligations
or duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part
of the Lessor owing to AVSA, except for the agreements of the Lessor set
forth in the Assignment, including, but not limited to Section 3(b) of the
Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights
and interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to
the Purchase Agreement and payment in full for the Aircraft as described
in the Participation Agreement and the Assignment, AVSA will not assert
any lien or claim against the Aircraft or any part thereof arising on or
prior to such delivery or in respect of any work or services performed on
or prior thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and has
the requisite power and authority to enter into and perform its
obligations under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms,
of the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent or
approval of, the giving notice to, or registration with, or the taking of
any other action in respect of, any French governmental authority or
agency except for those that have already been obtained and do not
contravene any law binding on AVSA or contravene AVSA's charter documents
or any indenture, credit agreement or other contractual agreement to which
AVSA is a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and
Agreement constitutes a binding obligation of AVSA enforceable against
AVSA in accordance with its terms, subject to: (i) the limitations of
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally; and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), which principles do not
make the remedies available at law or in equity with respect to the
Purchase Agreement and this Consent and Agreement inadequate for the
practical realization of the benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to
AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of August 1, 1998
AVSA, S.A.R.L.
By:_______________________
Name:
Title:
EXHIBIT F
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Words and phrases appearing in this Engine Warranty Assignment (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3,
1991, (the "GTA") by and between the Engine Manufacturer and
Federal Express Corporation ("Fed Ex"), including the Engine
Product Support Plan at Exhibit B, insofar as such Product
Support Plan relates to the Engine Warranties (the "Product
Support Plan"), but excluding any and all letter agreements
attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine
Warranty, New Parts Warranty, Ultimate Life Warranty and Campaign
Change Warranty, as set forth in the Engine Manufacturer's
Product Support Plan which forms a part of the GTA, and as
limited by the applicable terms of such GTA and Product Support
Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on
the aircraft at the time of delivery to the Assignor, each
bearing Engine Manufacturer's serial numbers 705-266 and 705-267,
respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines
which are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines
obtained from the Engine Manufacturer's lease pool which are
installed on the aircraft for the limited purpose of permitting
the continued operation of the aircraft during the period
necessary to effect or complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Lease") between State Street
Bank and Trust Company of Connecticut, National Association (not
in its individual capacity, but solely as Owner Trustee), as
Lessor ("Lessor") and Fed Ex, as Lessee, as amended, modified or
supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells,
assigns, transfers and sets over unto the Lessor all of its rights, claims and
interests in and under the GTA and the Product Support Plan, as such apply to
the Engines, to enforce in the Lessor's own name such rights as Fed Ex may have
with respect to the Engine Warranties, to the extent the same relate to the
Engines, and to retain any benefit resulting therefrom; provided, however, that
there is reserved to Fed Ex all of its other rights, claims and interests under
the GTA except as expressly stated above. Fed Ex shall, during the term of the
Lease (but only so long as no Event of Default shall have occurred and be
continuing), have the benefit of and shall be entitled to enforce (as it shall
deem appropriate), either in its own name or (at the cost of Fed Ex) in the
name of the Lessor for the use and benefit of Fed Ex, any and all Engine
Warranties available to the Lessor under the GTA in respect of the Engines and
each Part thereof, and the Lessor agrees (but only so long as no Event of
Default shall have occurred and be continuing) at Fed Ex's expense to do,
execute and deliver such further acts, deeds, matters or things as may be
reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and the Lessor confirm
expressly for the benefit of the Engine Manufacturer that:
A. The Lessor agrees that it will not, without the prior written
consent of the Engine Manufacturer, disclose, directly or
indirectly, to any third party, any of the terms of the Engine
Warranties disclosed to it by the Engine Manufacturer incident to
effecting the assignment herein; provided, however, that (1) the
Lessor may use, retain and disclose such information on a
confidential basis to its special counsel, independent insurance
brokers, bank examiners or similar regulatory authorities,
auditors and public accountants, (2) the Lessor may use, retain
and disclose on a confidential basis such information to the
Owner Participant, the Indenture Trustee, the Pass Through
Trustee and any Certificate Holder, as the case may be, and their
special counsel, independent insurance brokers, bank examiners or
similar regulatory authorities, auditors and public accountants,
(3) the Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other
written demand under color of legal right, but it shall first, as
soon as practicable upon receipt of such demand and to the extent
permitted by applicable laws, furnish a copy thereof to Fed Ex
and to the Engine Manufacturer, and the Lessor, to the extent
permitted by applicable law, shall afford Fed Ex and the Engine
Manufacturer reasonable opportunity, at the moving party's cost
and expense, to obtain a protective order or other assurance
reasonably satisfactory to the Engine Manufacturer of
confidential treatment of the information required to be
disclosed, (4)the Lessor may disclose such information as
required to enforce its rights under the Engine Warranties
assigned to it pursuant to this Assignment, and (5) the Lessor
may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines or any beneficial
interest therein (subject to the execution by such prospective
purchaser of a written confidentiality statement setting forth
the same or substantially similar terms as those referred to in
this paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, the Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any
rights under such Engine Warranties or in making any claim with
respect thereto, the applicable terms and conditions of the GTA,
including Article Eight (Limitation of Liability) and the Product
Support Plan, shall apply to, and be binding upon, the Lessor to
the same extent as Fed Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making
any claim with respect thereto, the applicable terms and
conditions of the GTA and the Product Support Plan or the Consent
attached hereto and incorporated herein shall apply to, and be
binding upon, the Lessor to the same extent as if named "Airline"
therein. It is expressly agreed that Fed Ex shall at all times
remain liable to the Engine Manufacturer under the GTA to perform
all the duties and obligations of Fed Ex thereunder to the same
extent as if this Assignment had not been executed. The
performance by the Lessor of any of the rights assigned hereunder
shall not release Fed Ex from any of its duties or obligations to
the Engine Manufacturer under the GTA except to the extent that
such exercise by the Lessor shall constitute performance of such
duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and
it is consented to by all parties to this Assignment that the
Lessor shall collaterally assign its rights under the Lease and
this Assignment and will mortgage the Aircraft and Engines, to
First Security Bank, National Association, as Indenture Trustee
under the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (on the terms set forth
therein); however, no further extension or assignment (except to
a successor indenture trustee under such agreement) of any
remaining Engine Warranties, including but not limited to
extensions or assignments for security purposes, are permitted
without the prior written consent of the Engine Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change
in the authority of Fed Ex or the Lessor, as the case may be, to
exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof from the
Indenture Trustee or the Lessor. Such notice shall be sent to:
Commercial Contracts Director, GE Aircraft Engines, Mail Drop
F17, One Neumann Way, Box 156301, Cincinnati, Ohio 45215-6301,
facsimile: (513) 243-8068.
F. This Assignment shall apply only in respect to each Engine and
shall not extend to any replacement or substitute engine. If,
during the term of this Assignment and the Lease, it becomes
necessary to replace or substitute an Engine due to a Failure (as
such term is defined in the Engine Product Support Plan,
excluding normal wear, tear and deterioration which can be
restored by overhaul and repair), damage or loss, the Assignor
(or the Lessor) shall give the Engine Manufacturer written notice
of such Failure, damage or loss. The notice shall include (i) a
description of the event or circumstances which constitute a
Failure, damage or loss, and (ii) the serial numbers of the (a)
failed, damaged or lost Engine and (b) Replacement Engine and
shall be sent to: Customer Support Manager, GE Aircraft Engines,
111 Merchant Street, Room 450, Cincinnati, Ohio 45246. The
Engine Manufacturer shall not be deemed to have knowledge of the
need for a replacement engine until it has received the
aforementioned notice.
In the event an Engine subject to this Assignment fails, is
damaged or lost, and such Engine is replaced by a Replacement
Engine, the Assignor and the Assignee shall, prior to, or
contemporaneous with, the delivery of such Replacement Engine,
obtain the written consent of the Engine Manufacturer (which it
shall be obligated to give) that the Engine Warranties as set
forth in the Engine Product Support Plan shall apply to such
Replacement Engines. The Engine Manufacturer shall not incur any
obligation or liability for a Replacement Engine under the Engine
Warranties until the execution of the aforementioned consent.
G. At any time and upon the written request of the Engine
Manufacturer, Fed Ex and the Lessor shall promptly and duly
execute and deliver any and all such further assurances,
instruments and documents and take all such further action, at
the expense of Fed Ex, as the Engine Manufacturer may reasonably
request in order to obtain the full benefit of Fed Ex and the
Lessor's agreement as set forth in this Assignment and the
Consent attached hereto and incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the
respective interests of Fed Ex and the Lessor. So long as the
Engine Manufacturer acts in good faith in accordance with this
Assignment, the Engine Manufacturer may rely conclusively on any
notice given pursuant to this Assignment without inquiring as to
the accuracy of, or the entitlement of the party to give, such
notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims
and interests, as and to the extent such relates to the purchase and operation
of engines other than the Engines subject to the Assignment, as well as other
matters not directly pertaining to the Engines, and Fed Ex will have or retain
under the GTA such rights, claims and interest not expressly assigned to the
Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by Martin Marietta.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of Default
or otherwise, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject to
the execution of an agreement to sell or lease such Engines, a General Terms
Agreement on the Engine Manufacturer's standard terms and conditions. If,
however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, the parties hereto have caused this Engine Warranty
Assignment to be duly executed and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
State Street Bank and Trust Company
of Connecticut, National Association
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name: Paul D. Allen
Title: Vice President
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N677FE), dated as
of August 1, 1998 and entered into by and between Federal Express Corporation,
as Assignor ("Fed Ex") and State Street Bank and Trust Company of Connecticut,
National Association (not in its individual capacity, but solely as Owner
Trustee) as Assignee ("Lessor"), (the "Purchase Agreement Assignment"); and
(ii) the Lease Agreement (Federal Express Corporation Trust No. N677FE), dated
as of June 15, 1998, as amended and restated as of August 1, 1998 and entered
into by and between Fed Ex, as Lessee and the Lessor, as Lessor (as in effect
from time to time, the "Lease") and (iii) the Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N677FE), dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Indenture"), between
the Lessor and First Security Bank, National Association, as Indenture Trustee
("Indenture Trustee"). The Purchase Agreement Assignment and Lease cover two
GE CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
705-266 and 705-267, respectively, (the "Engines") as installed on the Airbus
A300F4-605R series aircraft bearing Manufacturer's serial number 791 (the
"Aircraft"). In connection with such Purchase Agreement Assignment and Lease,
reference is made to the General Terms Agreement No. 6-9034 dated as of July 3,
1991, between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), under which the Engine Manufacturer agreed to support certain GE
CF6-80C2-A5F series engines, including the Engines and spare parts therefor to
be purchased by Fed Ex from the Engine Manufacturer, as installed on certain
Airbus A300F4-605R series aircraft, including the Aircraft. Recognizing that
the Lessor and Fed Ex have entered into the Lease which provides for the lease
by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessorhas
granted a security interest in the Engines and assigned certain of its rights
under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that
in furtherance of the Lease, it will so support such Engines and spare parts
therefor, subject to the applicable terms and conditions of the General Terms
Agreement, including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws
of the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not
require any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performance of the Engine Warranties, as
defined in the Engine Warranty Assignment attached hereto
(the "Engine Warranties") in accordance with their terms have
been duly authorized by all necessary corporate action on the
part of the Engine Manufacturer, do not require any
shareholder approval and do not contravene the Engine
Manufacturer's certificate of incorporation or by-laws or any
debenture, credit agreement or other contractual agreement to
which the Engine Manufacturer is a party or by which it is
bound or any law binding on the Engine Manufacturer; and
4. the Engine Warranties constitute, as of the date on which
they were made and at all times thereafter, and this Consent
and the Engine Warranty Assignment attached hereto are,
binding obligations of the Engine Manufacturer enforceable
against the Engine Manufacturer in accordance with its terms
subject to:
(a) the limitation of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
This Consent shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
General Electric Company
______________________________
Name:
Title:
Exhibit 3.
- -------------------------------------------------------------------------------
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
between
CESSNA FINANCE CORPORATION,
Trustor
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Owner Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
- -------------------------------------------------------------------------------
Page
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TABLE OF CONTENTS
PARTIES..................................................................... 1
RECITALS.................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee............ 1
Section 1.02. Declaration of Trust.................................... 2
Section 1.03. Conditions Precedent and Advances by Trustor. .......... 2
Section 1.04. Prohibited Activity..................................... 3
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc. ............................................. 3
Section 2.02. Excepted Payments....................................... 4
Section 2.03. Other Receipts.......................................... 4
Section 2.04. Distributions after Default. ........................... 4
Section 2.05. Distributions after Release of Lien of Indenture........ 4
Section 2.06. Manner of Making Distributions.......................... 5
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties.......................... 5
Section 3.02. Limitation on Authority of Owner Trustee................ 6
Section 3.03. Notice of Default....................................... 6
Section 3.04. Action Upon Instructions................................ 6
Section 3.05. Certain Duties and Responsibilities of Owner Trustee.... 7
Section 3.06. Certain Rights of Owner Trustee......................... 8
Section 3.07. No Representations or Warranties as to Certain
Matters............................................ 10
Section 3.08. Status of Moneys Received............................... 10
Section 3.09. Self-Dealing............................................ 11
Section 3.10. Definition of a Responsible Officer..................... 11
Section 3.11. Resignation or Removal of Owner Trustee................. 11
Section 3.12. Estate and Rights of Successor Owner Trustee............ 11
Section 3.13. Merger or Consolidation of SSB.......................... 12
Section 3.14. Co-Trustees............................................. 12
Section 3.15. Interpretation of Agreements............................ 13
Section 3.16. Not Acting in Individual Capacity....................... 14
Section 3.17. Tax Returns............................................. 14
Section 3.18. Independent Business.................................... 14
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination............................................. 16
Section 4.02. Distribution of Lessor's Estate upon Termination........ 17
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification......................................... 19
Section 6.02. Supplements and Amendments.............................. 20
Section 6.03. Nature of Title of Trustor.............................. 21
Section 6.04. Power of Owner Trustee to Convey........................ 21
Section 6.05. Notices................................................. 21
Section 6.06. Situs of Trust; Applicable Law; Severability............ 22
Section 6.07. Successors and Assigns.................................. 22
Section 6.08. Headings and Table of Contents.......................... 23
Section 6.09. Identification of Trust................................. 23
Section 6.10. Counterparts............................................ 23
Section 6.11. Trustor Interest........................................ 23
Schedule I Definitions
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
dated as of June 15, 1998, as amended and restated as of August 1, 1998 (this
"Agreement") between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association (in its individual
capacity, "SSB", and not in its individual capacity but solely as trustee
hereunder, the "Owner Trustee"), and CESSNA FINANCE CORPORATION, a Kansas
corporation (together with its successors and permitted assigns, the
"Trustor"). The capitalized terms used herein, unless otherwise herein defined
or the context hereof shall otherwise require, shall have the respective
meanings set forth in Schedule I attached hereto.
W I T N E S S E T H :
WHEREAS, the Initial Owner Participant and SSB have heretofore
entered into the Original Trust Agreement;
WHEREAS, because the Original Trust Agreement was executed prior
to delivery of the Aircraft, the Original Trust Agreement was not filed with
the Federal Aviation Administration;
WHEREAS, the Initial Owner Participant has transferred its
Beneficial Interest to the Trustor; and
WHEREAS, the Initial Owner Participant and SSB have agreed that
the Original Trust Agreement be amended and restated in its entirety as herein
provided.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, SSB and the Trustor agree that the Original Trust
Agreement be and the same is hereby amended and restated in its entirety as
follows:
ARTICLE 1
THE LESSOR'S ESTATE
Section 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs (or has authorized and directed) the
Owner Trustee, not individually but solely as the Owner Trustee hereunder:
(a) to execute and deliver the Participation Agreement and each
of the other Operative Agreements to which the Owner Trustee is a party
and to enter into and perform the transactions contemplated thereby
including, without limitation, accepting title to, and delivery of, the
Aircraft from AVSA on the Delivery Date, and taking all appropriate action
to cause the Airframe to be registered with the Federal Aviation
Administration in the name of the Owner Trustee;
(b) to execute and deliver from time to time the Certificates in
the manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in
the Operative Agreements to which the Owner Trustee is a party or which
the Owner Trustee is required to deliver pursuant to the Operative
Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents
or certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the Delivery Date and the transactions contemplated
hereby, the taking of any such action by the Owner Trustee in the presence
of the Trustor or its counsel to evidence, conclusively, the direction of
the Trustor.
Section 1.02. Declaration of Trust. SSB hereby confirms, in its
individual capacity, that it holds and will continue to hold, in its capacity
as the Owner Trustee, the Lessor's Estate upon the trust herein set forth for
the use and benefit of the Trustor, subject, however, to the provisions of, and
the Lien created by, the Indenture. This Agreement is not intended by the
Trustor to create, and the trust created hereby is not intended by the Trustor
and the other parties interested herein to constitute a business trust for
purposes of the Bankruptcy Code.
Section 1.03. Conditions Precedent and Advances by Trustor. The
Trustor agrees to make advances to the Owner Trustee in such amounts and at
such times as may be necessary to permit the Owner Trustee to satisfy its
obligations under Section 3.02 of the Participation Agreement, subject to the
conditions set forth therein. The right and obligation of the Owner Trustee to
take the actions required by Section 1.01 hereof shall be subject to the
condition that the Trustor shall have made the full aggregate amount of the
advances required to be made by the Trustor pursuant to Section 3.02(a) of the
Participation Agreement.
Section 1.04. Prohibited Activity. The Owner Trustee shall not,
and the Trustor shall not cause the Owner Trustee to, engage in any activity
other than as contemplated or permitted under the Operative Agreements.
ARTICLE 2
DISTRIBUTIONS
Section 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the Owner
Trustee under the Lease (other than Excepted Payments) are to be first paid to
the Indenture Trustee while the Lien of the Indenture is in effect, for
distribution in accordance with the terms of Article V of the Indenture.
Except as otherwise provided in Section 2.04 hereof (and except for amounts
received from the Indenture Trustee, which shall be applicable only in
accordance with clause (iii) below), the Owner Trustee shall promptly apply
each payment of Rent (other than Excepted Payments), Stipulated Loss Value,
Termination Value, and any proceeds from the sale, requisition or disposition
of the Aircraft received by it as follows:
(i) prior to the release of the Lien of the Indenture, each
such payment shall be payable directly to the Indenture Trustee (and if
any of the same are received by the Owner Trustee shall, upon receipt, be
paid over to the Indenture Trustee without deduction, set off or
adjustment of any kind) for distribution in accordance with the provisions
of Article V of the Indenture; provided, that any payments received by the
Owner Trustee from (x) the Lessee with respect to SSB's or the Owner
Trustee's fees and disbursements under this Agreement, or (y) the Trustor
pursuant to Section 6.01 hereof shall not be paid over to the Indenture
Trustee but shall be retained by the Owner Trustee and applied toward the
purpose for which such payments were made;
(ii) after the release of the Lien of the Indenture, any
amount remaining after application in full in accordance with paragraph
(i) of this Section 2.01 and which represents payments for which provision
as to the application thereof is made in any other Operative Agreement
shall be applied promptly to the purpose for which such payment shall have
been made in accordance with the terms of such Operative Agreement; and
(iii) after application in accordance with paragraphs (i) and
(ii) of this Section 2.01, or to the extent received from the Indenture
Trustee under the terms of the Indenture, the balance, if any, remaining
shall be paid to the Trustor.
Section 2.02. Excepted Payments. All Excepted Payments at any
time received by the Owner Trustee shall be distributed promptly to the
applicable Person, and such payment shall not be deemed under any circumstances
to be part of the Lessor's Estate.
Section 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee (and
if any of the same are received by the Owner Trustee shall, upon receipt, be
paid over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V of
the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
Section 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture or the Lease shall have been declared in default (including, without
limitation, any amounts realized by the Owner Trustee or the Trustor from the
exercise of any remedies pursuant to Section 17.01 of the Lease), as well as
(ii) all funds then held or thereafter received by the Owner Trustee as part of
this Trust Agreement, the Lease or otherwise, shall be distributed to the
Indenture Trustee for distribution in accordance with the provisions of Article
V of the Indenture.
Section 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or any
part thereof (including, without limitation, all payments received
pursuant to Section 17.01 of the Lease and amounts realized upon the sale
or lease of the Aircraft or any part thereof after the termination of the
Lease with respect thereto), to the extent received or realized at any
time after the Lien of the Indenture shall have been released pursuant to
the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after payment in full of amounts
described in paragraph (a), shall, to the extent required, be retained by
the Owner Trustee as reimbursement for all expenses hereunder or under the
Lease not theretofore reimbursed under this Agreement, the Lease or
otherwise and to which the Owner Trustee is entitled to be reimbursed
pursuant to the provisions thereof, and any balance remaining thereafter
shall be distributed to the Trustor.
Section 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to such account or accounts of the
Trustor as it may designate from time to time by written notice to the Owner
Trustee (and the Owner Trustee shall use best efforts to cause such funds to be
transferred by wire transfer on the same day as received, but in any case not
later than the next succeeding Business Day), and (ii) the Indenture Trustee
pursuant to this Article 2 by paying the amount to be distributed to the
Indenture Trustee in the manner specified in the Indenture; provided, that the
Owner Trustee shall invest overnight, for the benefit of the Trustor, in
investments that would be permitted by Article 23 of the Lease (but only to the
extent funds are received on or prior to 1:00P.M. (Eastern Time) and such
investments are available and, if such investments are not available to the
Owner Trustee in investments which, after consultation with the Trustor, the
Trustor shall direct) all funds not transferred by wire transfer on the same
day as they were received. Notwithstanding the foregoing but subject always to
the provisions of, and the Lien created by, the Indenture, the Owner Trustee
will, if so requested by the Trustor by written notice, pay in immediately
available funds any and all amounts payable by the Owner Trustee hereunder to
the Trustor as directed by the Trustor.
ARTICLE 3
THE OWNER TRUSTEE
Section 3.01. Acceptance of Trust and Duties. SSB accepts the
trust hereby created and, subject to Section 1.03 hereof, in its capacity as
the Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof as
herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Sections 7.01(c),
7.02(a) and (b) and 7.04 of the Participation Agreement or its covenants given
in its individual capacity in Section 3.05 of the Indenture or elsewhere in the
Operative Agreements, (c) the failure to use ordinary care in receiving,
handling and disbursing funds, (d) Lessor's Liens attributable to it in its
individual capacity, and (e) taxes, fees, or other charges on, based on, or
measured by, any fees, commissions or compensation received by SSB or the Owner
Trustee in connection with the transactions contemplated by the Lease, the
Indenture and the Operative Agreements including this Agreement.
Section 3.02. Limitation on Authority of Owner Trustee. The
Owner Trustee shall have no power, right, duty or authority to manage, control,
possess, use, sell, lease, dispose of or otherwise deal with the Aircraft,
Airframe, Engines, any Part thereof or any other property at any time
constituting a part of the Lessor's Estate, or otherwise to take or refrain
from taking any action under or in connection with the Operative Agreements,
except (i) to execute and deliver the Operative Agreements to which it is a
party, (ii) to exercise and carry out or cause to be exercised or carried out
the rights, duties and obligations of the Owner Trustee hereunder and under the
other Operative Agreements as authorized and directed by the Trustor, or (iii)
as expressly provided in written instructions from the Trustor given pursuant
to Section 3.03 or 3.04 hereof; provided, that nothing in this Section 3.02
shall limit in any manner the obligations of the Owner Trustee hereunder.
Section 3.03. Notice of Default. In the event that a
Responsible Officer in the Corporate Trust Administration of the Owner Trustee
shall have actual knowledge of a Default or an Event of Default, or an
Indenture Default or an Indenture Event of Default, the Owner Trustee shall
give or cause to be given to the Trustor and the Indenture Trustee prompt
notice (in any event within two Business Days of the discovery thereof), in
accordance with Article 14 of the Participation Agreement, of such Default,
Event of Default, Indenture Default or Indenture Event of Default. Subject to
the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee
under the Indenture, the Owner Trustee shall take such action with respect to
such Default, Event of Default, Indenture Default or Indenture Event of Default
as shall be specified in written instructions from the Trustor; provided that
the Owner Trustee shall have no duty to take any action whatsoever in the
absence of instructions from the Trustor. For all purposes of this Agreement
and the Lease, in the absence of actual knowledge of a Responsible Officer of
the Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a
Default, Event of Default, Indenture Default or Indenture Event of Default
unless notified in writing by the Lessee, the Trustor, the Indenture Trustee or
any Certificate Holder.
Section 3.04. Action Upon Instructions. Upon the written
instructions at any time and from time to time of the Trustor, the Owner
Trustee will take or refrain from taking such action, not inconsistent with
provisions of the Indenture, as may be specified in such instructions.
Section 3.05. Certain Duties and Responsibilities of Owner
Trustee. (a)(i) The Owner Trustee undertakes to perform such duties and only
such duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with instructions given by
the Trustor hereunder, and no implied duties, covenants or obligations shall be
read into this Agreement, any such instructions or the Operative Agreements
against the Owner Trustee, and the Owner Trustee agrees that it will not
manage, control, possess, use, sell, lease, dispose of or otherwise deal with
the Aircraft or any part of the Lessor's Estate except as required by the terms
of the Operative Agreements, any such instructions and as otherwise provided
herein; and
(ii) in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Owner Trustee and conforming to the requirements of this Agreement
or the other Operative Agreements, but in the case of any such
certificates or opinions which by any provisions hereof or thereof are
specifically required to be furnished to the Owner Trustee, the Owner
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement or the
Operative Agreements.
(b) No provision hereof shall require the Owner Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Notwithstanding the foregoing, SSB agrees in its
individual capacity that it will, at its own cost and expense, promptly take
such action as may be necessary to discharge duly all Lessor's Liens
attributable to it in its individual capacity and will claim no indemnity
therefor hereunder, or under the Participation Agreement or any Operative
Agreement.
(c) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Owner Trustee shall be subject to the
provisions of this Section 3.05, except that in the event of a conflict between
this Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be
controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Owner Trustee hereunder or under the other Operative Agreements or the
Original Agreements (including those furnished to the Indenture Trustee
pursuant to the terms of the Indenture) and not otherwise furnished to the
Trustor.
(e) Notwithstanding anything herein to the contrary, the
Owner Trustee shall not be authorized and shall have no power to "vary the
investment" of the Trustor within the meaning of Treasury Regulations Section
301.7701-4(c)(1), it being understood that the Owner Trustee shall have the
power and authority to fulfill its obligations under Section 2.06 hereof and
Article 23 of the Lease.
Section 3.06. Certain Rights of Owner Trustee. Except as
otherwise provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner
Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order or other paper or
document reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction or authorization by the Trustor or
any other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered
to the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the
Owner Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder or
under any of the other Operative Agreements, the Owner Trustee (unless
other evidence be herein or therein specifically prescribed), absent
actual knowledge of a Responsible Officer of the Owner Trustee to the
contrary, may rely in good faith upon a certificate in writing, delivered
to the Owner Trustee and signed by any of the Chairman of the Board, the
President, any Vice President, the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary of the Lessee, the Trustor, or the
Indenture Trustee and notice of such need for such proof or establishment
shall be delivered to the Trustor, who may advise the Owner Trustee in
respect of such matter and the Owner Trustee shall act in conformity with
such advice;
(d) the Owner Trustee may exercise its powers and perform its
duties by or through such attorneys, agents and servants as it shall
appoint with due care, and it shall be entitled to rely upon the advice of
counsel reasonably selected by it with due care and shall be protected by
the advice of such counsel in anything done or omitted to be done in
accordance with such advice;
(e) the Owner Trustee shall not be under any obligation to
take any action under this Agreement or under any of the other Operative
Agreements at the request or direction of the Trustor unless the Persons
making such request or direction shall have offered to the Owner Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction; nor shall the Owner Trustee be required to take any action
deemed to impose on the Owner Trustee any obligation to take any action,
if the Owner Trustee shall have been advised by its counsel that such
action is unlawful or is contrary to the terms of this Agreement or the
other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order or other paper or document unless a Responsible
Officer of the Owner Trustee has actual knowledge that the facts or
matters stated therein are false or inaccurate, but the Owner Trustee in
its discretion may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Owner Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, to the same extent permitted to the Lessor under the Lease, to
examine the books and records of the Lessee to reasonably determine
whether the Lessee is in compliance with the terms and conditions of the
Lease and to examine the Aircraft, Airframe, Engines or any Part thereof
personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof,
except as otherwise provided in written instructions given to the Owner
Trustee by the Trustor or as otherwise provided in the Indenture or the
Participation Agreement, the Owner Trustee shall not have any duty (i) to
see to any recording or filing of the Lease or of this Agreement or any
financing statement or other notice or document relating thereto or
contemplated under the Operative Agreements or to see to the maintenance
of any such recording or filing (other than FAA reporting requirements
contained in 14C.F.R. Sections 47.45 and 47.51), (ii) to see to any
insurance on the Aircraft or any part thereof or to effect or maintain any
such insurance, whether or not the Lessee shall be in default with respect
thereto, other than to forward to the Trustor copies of all certificates,
reports and other written information which it receives from the Lessee
pursuant to the Lease, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charges or any Lien (except any
Lessor's Lien attributable to it in its individual capacity) owing with
respect to, or assessed or levied against any part of the Lessor's Estate,
(iv) to confirm or verify any financial statements or reports of the
Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire
as to the performance or observance of any of the Lessee's covenants under
the Lease.
Section 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR SSB MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR
A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that SSB represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever rights, title and interests in, to and under the
Aircraft that were conveyed to it by AVSA and SSB represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is a
party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or SSB and except that SSB
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor) the
other Operative Agreements to which the Owner Trustee is a party have been (or
at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by SSB and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of SSB enforceable against
it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity.
Section 3.08. Status of Moneys Received. All moneys received by
the Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which they
were paid or are held, but need not be segregated in any manner from any other
moneys except to the extent required by law and subsection (e) of Section 3.18
hereof and may be deposited by the Owner Trustee under such conditions as may
be prescribed or permitted by law for trust funds, or may be invested in direct
obligations of the United States.
Section 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
Section 3.10. Definition of a Responsible Officer. For purposes
of this Trust Agreement only, "Responsible Officer" when used with respect to
the Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title "Vice
President"), the Secretary, any Assistant Secretary, or any other officer in
the Corporate Trust Administration of SSB customarily performing functions
similar to those performed by any of the above designated officers.
Section 3.11. Resignation or Removal of Owner Trustee. The
Owner Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, the Trustor may at any
time remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee and the Indenture Trustee, such removal to be
effective only upon the appointment by the Trustor of a successor Owner Trustee
and the acceptance of such appointment by such successor. Upon the giving of
notice of resignation or removal of the Owner Trustee, the Trustor may appoint
a successor Owner Trustee by an instrument signed by the Trustor. If the
Trustor shall not have so appointed a successor Owner Trustee within 30 days
after such resignation or removal, the Owner Trustee, the Indenture Trustee or
the Trustor may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor or
successors shall have been appointed by the Trustor as above provided. Any
successor Owner Trustee so appointed by a court shall be superseded by any
successor Owner Trustee subsequently appointed by the Trustor.
The appointment of any successor Owner Trustee shall be subject
to the conditions set forth in Section 11.01 of the Participation Agreement.
Section 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, and thereupon each successor
Owner Trustee, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trust of the predecessor Owner Trustee
in the trust hereunder with like effect as if originally named as an Owner
Trustee herein, but nevertheless upon the written request of such successor
Owner Trustee, such predecessor Owner Trustee shall execute and deliver an
instrument transferring to such successor Owner Trustee, upon the trust herein
expressed, all estates, properties, rights, powers, duties, property or moneys
then held by such predecessor Owner Trustee upon the trust herein expressed.
Upon any such transfer by a predecessor Owner Trustee, such predecessor Owner
Trustee shall provide the successor Owner Trustee and Trustor an accounting of
the Lessor's Estate and the trust hereunder.
Upon the appointment of any successor Owner Trustee hereunder,
the predecessor Owner Trustee will use its best efforts to cause registration
of the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner Trustee
in complying, with the provisions of Section 11.01 of the Participation
Agreement.
Section 3.13. Merger or Consolidation of SSB. Any corporation
into which SSB in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which SSB shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
Section 3.14. Co-Trustees. At any time, if the Owner Trustee or
the Trustor shall deem it necessary or prudent or desirable in order to conform
to legal requirements of any jurisdiction in which any part of the Lessor's
Estate may at the time be located, the Trustor and the Owner Trustee jointly
shall have the power, and shall execute and deliver all instruments, to appoint
one or more Persons approved by the Trustor and the Owner Trustee to act as
co-trustee, or co-trustees, jointly with the Owner Trustee, or separate trustee
or separate trustees (except insofar as local law makes it necessary or prudent
or desirable for any such co-trustee or separate trustee to act alone), of all
or any part of the Lessor's Estate, and to vest in such Person or Persons, in
such capacity, such title to the Lessor's Estate or any part thereof, and such
rights, powers, duties, trusts or obligations as the Trustor and the Owner
Trustee may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in the
Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an
instrument in writing, constitute the Owner Trustee its or his attorney-in-fact
and agent with full power and authority to do all acts and things and to
exercise all discretion on its or his behalf and in its or his name subject to
the conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the
United States and, to the extent permitted by law, be appointed and act, and
the Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and management of
monies, the Aircraft or documents authorized to be delivered hereunder or
under the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be conferred or imposed
upon and exercised or performed by the Owner Trustee and such additional
trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(including the holding of title to the Lessor's Estate) the Owner Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which is provided hereby may be
exercised by, any such additional trustee, except jointly with, or with
the consent in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder except as otherwise
provided hereunder; and
(E) the Trustor, at any time, by an instrument in writing may
remove any such additional trustee.
Section 3.15. Interpretation of Agreements. In the event that
the Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is silent
or incomplete as to the course of action which the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee shall request
in writing sent in accordance with Article 14 of the Participation Agreement
instructions of the Trustor and, to the extent that the Owner Trustee acts in
good faith in accordance with any instructions received from the Trustor, shall
not be liable to any Person; provided, that in the event that no response is
made to the Owner Trustee by the Trustor within 25 Business Days after such
request, the Owner Trustee shall not be liable to any Person for acts taken by
the Owner Trustee in good faith or for any failure to act, except to the extent
provided in the last sentence of Section 3.01 hereof.
Section 3.16. Not Acting in Individual Capacity. In carrying
out the trust hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any claim
against the Owner Trustee by reason of the transactions contemplated hereby
shall look only to the Lessor's Estate for payment or satisfaction thereof,
except to the extent provided in the last sentence of Section 3.01 hereof.
Section 3.17. Tax Returns. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to
the receipt and disbursement of all moneys under this Agreement or any
Operative Agreement. The Trustor shall be responsible for causing to be
prepared and filed all income tax returns required to be filed by the Trustor.
The Owner Trustee, upon the request of the Trustor, will furnish the Trustor
with all such information as may be reasonably required or necessary from the
Owner Trustee in connection with the preparation of such tax returns and in
connection with any other filing or audit and related litigation obligations.
The Owner Trustee shall be responsible for causing to be prepared at the
request of the Trustor and at the expense of the Lessee all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns; provided, however, that the Owner Trustee shall send a
completed copy of each such return to the Trustor not more than 60 nor less
than 30 days prior to the due date of such return; provided that the Owner
Trustee shall have timely received all necessary information to complete and
deliver to the Trustor such return. The Trustor, upon request, will furnish
the Owner Trustee with all such information as may be required from the Trustor
in connection with the preparation of such income tax returns.
Section 3.18. Independent Business. The Owner Trustee will
conduct its activities such that the Owner Trust is a separate and readily
identifiable trust separate from, and independent of, the Trustor and any of
its Affiliates (it being understood that the Trustor and its Affiliates may
publish financial statements that consolidate those of the Owner Trustee, if to
do so is required by any applicable law or accounting principles from time to
time in effect) and:
(a) it will observe all formalities required under this
Agreement necessary to cause the Owner Trust to remain a common law trust
separate and distinct from the Trustor and any of its Affiliates;
(b) it will maintain each of the assets and liabilities of the
Owner Trust separate and distinct from those of the Trustor and any of its
Affiliates;
(c) it will maintain records, books, accounts, and minutes of
the Owner Trust separate from those of the Trustor and any of its
Affiliates;
(d) it will pay the obligations of the Owner Trust in the
ordinary course of business as a common law trust separate from the
Trustor and any of its Affiliates;
(e) it will keep funds held in the Trust Estate separate and
distinct from any funds of the Trustor and any of its Affiliates, and will
receive, deposit, withdraw and disburse such funds separately from any
funds of the Trustor and any of its Affiliates;
(f) it will conduct the activities of the Owner Trust in its own
name as trustee of the Owner Trust, and not in the name of the Trustor or
any of its Affiliates;
(g) it will not agree to pay or become liable for any debt of the
Trustor or any of its Affiliates other than as contemplated by the
Indenture;
(h) it will not induce any third party to rely on the
creditworthiness of the Trustor or any of its Affiliates in order that
such third party will be induced to contract with the Owner Trust (except
insofar as such third party may rely on the fact, if applicable, that the
Trustor or its Affiliate is the Lessee); and
(i) it will not enter into any transaction between the Owner
Trust and the Trustor or any of its Affiliates that is more favorable to
the Trustor and its Affiliates than transactions that the Owner Trustee
would have been able to enter into at such time on an arms-length basis
with a non-affiliated third party, other than any agreements in effect on
the date hereof or any transaction permitted pursuant to the Operative
Agreements.
ARTICLE 4
TERMINATION OF TRUST
Section 4.01. Termination. This Agreement and the trust created
and provided for hereby shall cease and be terminated in any one of the
following events, whichever shall first occur:
(a) If the Trustor shall by notice in writing to the Owner
Trustee revoke and terminate the trust on and as of a date stated in such
notice, which date shall not be less than ten nor more than thirty days
from the date of mailing such notice, in which case, on the date specified
in such notice the trust created and provided for hereby shall cease and
terminate; provided, that this Trust shall not be subject to revocation or
termination by the Trustor prior to the later of (x) payment in full and
discharge of the Certificates and all other indebtedness secured by the
Indenture and the release of the Lien of the Indenture and the security
interest granted thereby without the consent of the Indenture Trustee and
(y) the termination of the Lease; provided, further, that such notice
shall be accompanied by the written agreement of the Trustor to assume all
of the obligations of the Owner Trustee under the Operative Agreements and
all other obligations of the Owner Trustee incurred by it hereunder in its
role as the Owner Trustee arising from the revocation or termination of
the trust or this Agreement by the Trustor;
(b) The sale or other final disposition by the Owner Trustee
of all of its interest in all property constituting or included in the
Lessor's Estate and, if the Indenture shall then be in effect, the sale or
other disposition by the Indenture Trustee of all of its interest in all
property constituting or included in the Lessor's Estate, and the final
disposition by the Owner Trustee and, if the Indenture shall then be in
effect, the Indenture Trustee, of all moneys or other property or proceeds
constituting part of the Lessor's Estate in accordance with the terms
hereof; or
(c) 21 years less one day from the death of the last survivor
of the descendants of Queen Victoria of England living on the date of this
Agreement; provided, however, that if the Trust shall be or become valid
under applicable law for a period subsequent to 21 years less one day from
the death of the last survivor of the descendants of Queen Victoria of
England living on the date of this Agreement or, without limiting the
generality of the foregoing, if legislation shall become effective
providing for the validity or permitting the effective grant of such trust
for a period, in gross, exceeding the period for which such trust is
hereinabove stated to extend and be valid, then such trust shall not
terminate as provided in the first part of this sentence but shall extend
to and continue in effect until, but only if such non-termination and
extension shall then be valid under applicable law, such time as the same
shall, under applicable law, cease to be valid.
In the event of a termination pursuant to this Section 4.01, if
the Indenture is still in effect, the Trustor will promptly and duly execute
and deliver to the Indenture Trustee such documents and assurances including,
without limitation, conveyances, financing statements and continuation
statements with respect to financing statements and take such further action as
the Indenture Trustee may from time to time reasonably request and furnish in
order to protect the rights and remedies created or intended to be created in
favor of the Indenture Trustee under the Indenture and to create for the
benefit of the Certificate Holders a valid first priority Lien with respect to,
and a first and prior perfected security interest in, the Trust Indenture
Estate.
Section 4.02. Distribution of Lessor's Estate upon Termination.
Upon any termination of this Trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that in the
event such written instructions are not delivered to the Owner Trustee on or
before the date of termination, the Owner Trustee shall transfer title to the
Lessor's Estate to the Trustor. Upon making such transfer or sale and
accounting for all funds which have come into its hands, the Owner Trustee
shall be entitled to receipt of any sums due and owing to the Owner Trustee for
expenses incurred pursuant hereto as set forth in Section 2.05 hereof.
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
The Trustor may assign, convey or otherwise transfer to a single
institutional investor all (but not less than all) of the Beneficial Interest
then owned by the Trustor, provided that it gives the Lessee and the Indenture
Trustee at least 10 Business Days' notice of such assignment, conveyance or
other transfer and provided further that the transferor Trustor shall remain
liable for all obligations of the Trustor under this Agreement and the
Operative Agreements to which the Trustor is a party to the extent (but only to
the extent) incurred on or before the date of such transfer and provided that
the transferee agrees by a written instrument in form and substance reasonably
satisfactory to the Indenture Trustee, the Owner Trustee and the Lessee to
assume primary liability for all obligations as a trustor under this Agreement
and the other Operative Agreements to which such trustor is a party incurred
after the date of transfer and the Trustor shall remain secondarily liable for
all such obligations assumed by its successor as Trustor; provided, that the
Trustor need not so agree to remain and shall not be so secondarily liable if
(a) such transferee is (i) a bank, savings institution, finance company,
leasing company or trust company, national banking association acting for its
own account or in a fiduciary capacity as trustee or agent under any pension,
retirement, profit sharing or similar trust or fund, insurance company,
fraternal benefit society or corporation acting for its own account having a
combined capital and surplus (or, if applicable, consolidated tangible net
worth or its equivalent) of not less than $75,000,000, (ii) a subsidiary of any
Person described in clause (i) where such Person provides (A) support for the
obligations assumed by such transferee subsidiary satisfactory to the Lessee,
the Owner Trustee and the Indenture Trustee or (B) an unconditional guaranty
satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee of such
transferee subsidiary's obligations, or (iii) an Affiliate of the transferor
Trustor, so long as such Affiliate has a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent) of not less than
$75,000,000, (b) such transferee is legally capable of binding itself to the
obligations of the transferor Trustor and expressly agrees to assume all
obligations of the transferor Trustor under the Participation Agreement and
this Agreement and (c) such transferee shall provide representations
substantially similar to those contained in Section 7.03(a) of the
Participation Agreement. In the event of any such assignment, conveyance or
transfer, the transferee shall become a party to this Agreement and shall agree
to be bound by all the terms of and will undertake all of the obligations of
the transferor Trustor contained in this Agreement and the other Operative
Agreements in such manner as is reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Lessee. A transferee hereunder shall be (i) a
"U.S. Person" as defined in Section 7701(a)(30) of the Code (or any successor
provision thereto) or if the transferee shall not be such "U.S. Person" then
each Certificate Holder shall be provided an indemnity in form and substance
satisfactory to each such Certificate Holder, for any Taxes that may be imposed
on such Certificate Holders (currently or in the future) due to such
transferee's failure to be such a "U.S. Person" and (ii) a Citizen of the
United States or has established a voting trust, voting powers or other
arrangement reasonably satisfactory to the Indenture Trustee and the Lessee to
permit the Owner Trustee to be the registered owner of the Aircraft under the
Transportation Code. A transferee hereunder shall not be, and in acquiring the
Beneficial Interest shall not use the assets of, an ERISA Plan. Assuming the
truth of the representations made in Section 6.01(m) of the Participation
Agreement and compliance with Section 10.06 of the Indenture, no such
assignment, conveyance or transfer shall violate any provision of law or
regulation or create a relationship which would be in violation thereof. The
Owner Trustee shall not be on notice of or otherwise bound by any such
assignment, conveyance or transfer unless and until it shall have received an
executed counterpart of the instrument of such assignment, conveyance or
transfer. Upon any such disposition by the Trustor to a transferee as above
provided, the transferee shall be deemed a "Trustor" for all purposes hereof,
and shall be deemed to have made all the payments previously made by its
transferor and to have acquired the same interest in the Lessor's Estate as
theretofore held by its transferor; and each reference herein to a "Trustor"
shall thereafter be deemed a reference to such transferee. Notwithstanding
anything to the contrary contained in this Article 5, in no event (i) shall the
Trustor transfer its interest in the Beneficial Interest to any entity whose
business is that of a nationwide or worldwide overnight or expedited delivery
small package air courier, cargo or freight deliverer and which competes with
the Lessee or (ii) shall the Trustor, on or before December 31, 1998, transfer
its interest in the Beneficial Interest to a transferee which is not an
Affiliate of the Trustor.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Indemnification. The Trustor and its assigns
agrees to reimburse and save SSB, in its individual capacity, harmless against
any and all loss, damage, liability, claims, demands, disbursements and
expenses, including Taxes (excluding Taxes imposed against SSB upon or with
respect to any fees for services rendered in its capacity as Trustee hereunder)
and reasonable counsel fees, which are not required to be indemnified by the
Lessee pursuant to Section 9.01 of the Participation Agreement and which may be
incurred by reason of its being the Owner Trustee or acting hereunder or under
the Operative Agreements, but solely by reason thereof and arising out of or
relating solely to this Agreement or the other Operative Agreements or the
Aircraft or the Rents and other sums payable therefor, or by reason of any
occurrence directly relating thereto while so acting, and to secure the payment
thereof, SSB, in its individual capacity, shall have a Lien on the Lessor's
Estate and the proceeds thereof, including income, prior to any interest
therein of the Trustor and their respective assigns (but subject to the rights
of the Lessee under the Operative Agreements and subject and subordinate to the
Lien of the Indenture), except that SSB shall not have any such Lien (and the
Trustor shall have no obligation) in respect of any such loss, damage,
liability, claims, demands, disbursements and expenses, including Taxes and
counsel fees, arising from or as a result of (A) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (B)
any inaccuracy of any representation of SSB or any breach by SSB of its
warranties and covenants given in its individual capacity in this Agreement,
Article 5 of the Lease, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the
Participation Agreement and its representations and warranties in the Operative
Agreements, (C) the failure to use ordinary care in receiving, handling and
disbursing funds, (D) Lessor's Liens attributable to it in its individual
capacity, (E) Taxes, fees, or other charges on, based on, or measured by, any
fees, commissions or compensation received by SSB in connection with the
transactions contemplated by the Lease, the Indenture and this Agreement, (F)
Taxes excluded from the Lessee's obligation to indemnify SSB pursuant to
Section 8.01(b) of the Participation Agreement (disregarding for the purposes
of this Section 6.01, subsections (iii) or (vi) of Section 8.01(b) of the
Participation Agreement) or (G) Expenses excluded from the Lessee's obligation
to indemnify SSB pursuant to Section 9.01(b) of the Participation Agreement
(disregarding for the purposes of this Section 6.01, subsections (ii), (iv),
(vii) and (viii) of Section 9.01(b) of the Participation Agreement to the
extent such subsections relate to actions of the Trustor); provided, that,
before asserting any right to payment or indemnification hereunder, SSB shall
first demand (but need not exhaust its remedies with respect to) its
corresponding right to payment or indemnification from the Lessee pursuant to
the Participation Agreement. It is further understood that the distribution by
the Owner Trustee of all or any part of the Lessor's Estate as provided in
Section 4.02 of this Agreement shall not impair the right of SSB to indemnity,
payment and reimbursement as herein provided. In the event SSB makes any
advances at any time to pay or to provide for the payment of any such loss,
damage, liability, claim, demand or expense, then SSB, in its individual
capacity, shall be entitled, in addition to reimbursement for the principal of
the sum so advanced, to interest on the amount of such advances at the Prime
Rate. The provisions of this Section shall continue in force and effect
notwithstanding the termination of this Trust or the resignation, inability or
incapacity to act or removal of the Owner Trustee. SSB or the Owner Trustee
(in its individual capacity or as trustee, as the case may be) agrees that it
shall have no right against (except as provided in this Section 6.01) the
Trustor or (subject to the provisions of the Indenture) the Trust Indenture
Estate for any fee as compensation for its services hereunder.
Section 6.02. Supplements and Amendments. At any time and from
time to time, only upon the written request of the Trustor (a) SSB and the
Trustor shall execute a supplement hereto for the purpose of adding provisions
to, or changing or eliminating provisions of, this Agreement as specified in
such request and (b) the Owner Trustee shall, subject to the provisions of
Section 8.01 of the Indenture, enter into or consent to such written amendment
or modification of or supplement to any of the Operative Agreements as the
Indenture Trustee and any other necessary parties may agree to in writing and
as may be specified in such request, or execute and deliver such written waiver
of the terms of any of the Operative Agreements as may be agreed to in writing
by the Indenture Trustee and as may be specified in such request; provided,
that (i) the Owner Trustee shall not execute any such supplement, amendment,
waiver or modification without the prior written consent of the Trustor, (ii)
if in the reasonable opinion of the Owner Trustee any document required to be
executed by it pursuant to this Section adversely affects any right or duty of,
or immunity or indemnity in favor of, the Owner Trustee under this Agreement or
any other Operative Agreement, the Owner Trustee may in its discretion decline
to execute such document, (iii) any amendment or supplement to this Agreement
that would adversely affect the rights of the Indenture Trustee or the Holders
shall be subject to the prior written consent of the Indenture Trustee and (iv)
any amendment or supplement to this Agreement that would adversely affect the
rights of the Lessee shall be subject to the prior written consent of the
Lessee. It shall not be necessary that any request pursuant to this Section
specify the particular form of the proposed document to be executed pursuant to
such request, but it shall be sufficient if such request shall indicate the
substance thereof. Promptly after the execution by SSB or the Owner Trustee of
any document pursuant to this Section, the Owner Trustee shall mail a conformed
copy thereof to the Trustor, the Indenture Trustee and the Lessee, but the
failure of the Owner Trustee to mail such conformed copies shall not impair or
affect the validity of such document.
Section 6.03. Nature of Title of Trustor. No Trustor shall have
any legal title to any part of the Lessor's Estate. No transfer, by operation
of law or otherwise, of the right, title and interest of the Trustor in and to
the Lessor's Estate or the trust hereunder shall operate to terminate this
Agreement or Lessor's Estate.
Section 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Trustor in
and to the Operative Agreements or the Aircraft or such part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Owner Trustee.
Section 6.05. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and shall
be deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail, and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
If to the Owner Trustee: State Street Bank and Trust
Company of Connecticut,
National Association
225 Asylum Street
Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate/Muni Administration
Facsimile: (860) 244-1889
with a copy to State Street Bank and
Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5526
Facsimile: (617) 664-5371
If to the Trustor: Cessna Finance Corporation
5800 East Pawnee
Wichita, Kansas 67218
Attention: General Counsel
Telephone: (316) 660-1256
Facsimile: (316) 660-1264
with a copy to Textron Financial Corporation
40 Westminster Street
Providence, Rhode Island 02903
Attention: Vice President and
Division Manager,
Structured Finance Division
Telephone: (401) 621-4225
Facsimile: (401) 621-5045
If to the Indenture
Trustee: First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone: (801) 246-5630
Facsimile: (801) 246-5053
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
Section 6.06. Situs of Trust; Applicable Law; Severability.
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, INCLUDING ALL
MATTERS OF VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this
Agreement shall be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective; provided, that such remaining provisions
do not increase the obligations or liabilities of the Owner Trustee or the
Trustor.
Section 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Article 5 of this Agreement.
Section 6.08. Headings and Table of Contents. The headings of
the Articles and Sections of this Agreement and the Table of Contents are
inserted for convenience only and shall not affect the meaning or construction
of any of the provisions hereof.
Section 6.09. Identification of Trust. This Trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N677FE."
Section 6.10. Counterparts. This instrument may be executed in
any number of counterparts or upon separate signature pages bound together in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute and be one and the
same instrument.
Section 6.11. Trustor Interest. The Trustor has only a
beneficial interest in any specific property of this Trust. No creditor of the
Trustor shall have any right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, the property of this Trust (as
opposed to the Trustor's beneficial interest in this Trust).
IN WITNESS WHEREOF, SSB and the Trustor have caused this
Agreement to be duly executed all as of the date first above written.
CESSNA FINANCE CORPORATION
By: ______________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By: ______________________________________
Name: Paul D. Allen
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Exhibit 4.
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LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
and
FEDERAL EXPRESS CORPORATION,
Lessee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN
AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL
EXPRESS CORPORATION TRUST NO. N677FE) DATED AS OF JUNE 15, 1998, AS AMENDED AND
RESTATED AS OF AUGUST 1, 1998 FOR THE BENEFIT OF THE HOLDERS OF THE
CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS
LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE
CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, ON THE
SIGNATURE PAGES THEREOF.
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TABLE OF CONTENTS
Page
Initial Recitals............................................................ 1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term........................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].............................................. 2
Section 3.02. Basic Rent.............................................. 2
Section 3.03. Supplemental Rent....................................... 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the
Delivery Date...................................... 3
Section 3.05. Minimum Basic Rent...................................... 4
Section 3.06. Payment to Indenture Trustee............................ 5
Section 3.07. Costs and Expenses...................................... 5
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options......................................... 5
Section 4.02. Purchase Options........................................ 6
Section 4.03. Appraisal Procedures.................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............ 9
Section 5.02. No Modification of Other Warranties..................... 10
Section 5.03. Certain Agreements of the Lessee........................ 11
ARTICLE 6
LIENS
Section 6.01. Liens................................................... 11
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation................. 12
Section 7.02. Possession and Permitted Transfer and Sublease.......... 14
Section 7.03. Insignia................................................ 19
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts.................................... 20
Section 8.02. Pooling of Parts........................................ 21
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications.................. 21
Section 9.02. Other Alterations and Modifications..................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus...... 23
Section 10.02. Retention of Aircraft by the Lessor.................... 25
Section 10.03. Voluntary Termination as to Engines.................... 27
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights............................... 27
Section 11.02. Payment of Stipulated Loss Value....................... 27
Section 11.03. Replacement of Airframe and Engines.................... 28
Section 11.04. Event of Loss with Respect to an Engine................ 32
Section 11.05. Application of Payments from the Government
or Others.......................................... 34
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government.............................. 35
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe...................... 36
Section 11.08. Application of Payments During Existence of Certain
Defaults........................................... 36
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft..................................... 36
Section 12.02. Return of Engines...................................... 37
Section 12.03. Return of Manuals...................................... 37
Section 12.04. Condition of Aircraft.................................. 38
Section 12.05. Delayed Return of Aircraft............................. 39
Section 12.06. Storage................................................ 40
Section 12.07. Special Markings....................................... 40
Section 12.08. Lessor's Option to Purchase Parts...................... 40
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................ 41
Section 13.02. Insurance Against Loss or Damage to Aircraft
and Engines........................................ 43
Section 13.03. Application of Insurance Proceeds...................... 45
Section 13.04. Reports................................................ 46
Section 13.05. Lessor's Insurance..................................... 47
Section 13.06. Self-Insurance......................................... 47
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection.................................... 47
Section 14.02. No Obligation to Inspect............................... 48
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign............................... 48
Section 15.02. Citizenship............................................ 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default...................................... 49
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default......................... 51
Section 17.02. Cumulative Remedies.................................... 54
Section 17.03. Waiver................................................. 54
Section 17.04. Lessor's Right to Perform for Lessee................... 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment........................................ 55
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances..................................... 55
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease........................................ 56
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor....................................... 57
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders........... 58
Section 22.02. [Reserved]............................................. 58
Section 22.03. Consent of Lessee to Assignment of Lease as Security... 58
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds........................... 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease.............................. 60
ARTICLE 25
NOTICES
Section 25.01. Notices................................................ 61
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions.......................... 62
Section 26.02. References............................................. 62
Section 26.03. APPLICABLE LAW......................................... 62
Section 26.04. Severability........................................... 62
Section 26.05. No Oral Modification................................... 62
Section 26.06. Agreement as Chattel Paper............................. 62
Section 26.07. Counterparts........................................... 62
Section 26.08. Public Release of Information.......................... 63
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties.................................. 63
Section 27.02. Section 1110 Compliance................................ 63
Section 27.03. Finance Lease.......................................... 63
Schedule I Definitions
Schedule II Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
Exhibit A Form of Lease Supplement
Exhibit B Form of Purchase Agreement Assignment, Consent and
Agreement and AVSA Consent and Agreement
Exhibit C Form of Engine Warranty Assignment and Engine Consent
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
dated as of June 15, 1998, as amended and restated as of August 1, 1998 (this
"Lease") between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement (as defined in Article 1
below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation
(the "Lessee").
W I T N E S S E T H :
WHEREAS, all capitalized terms used herein shall have the
meanings assigned thereto as provided in Article 1 below;
WHEREAS, the Lessor and the Lessee have heretofore entered into
the Original Lease dated as of June 15, 1998;
WHEREAS, because the Original Lease was executed prior to
delivery of the Aircraft, the Original Lease was not filed with the Federal
Aviation Administration; and
WHEREAS, subject to the terms and conditions set forth in the
Participation Agreement (as hereinafter defined), the Lessee desires on the
Delivery Date (as hereinafter defined) to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft (as hereinafter defined) in
accordance with the terms and conditions set forth in this Lease.
NOW, THEREFORE, in consideration of the mutual promises herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms
herein shall have the meanings given in Schedule I hereto, for all purposes of
this Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Sale and Lease of Aircraft; Term. The Lessor,
subject to satisfaction or waiver of the conditions set forth in this Lease and
in the Participation Agreement, hereby agrees to purchase the Aircraft from
AVSA on the Delivery Date and agrees immediately thereafter to lease the
Aircraft to the Lessee pursuant to this Lease, and the Lessee hereby agrees to
lease the Aircraft from the Lessor, such lease to be evidenced by the execution
by the Lessor and the Lessee of a Lease Supplement leasing the Aircraft
hereunder. Such lease shall last for the Term, at all times during which full
legal title to the Aircraft shall remain vested with the Lessor to the
exclusion of the Lessee, notwithstanding the possession and use thereof by the
Lessee or any other Person. The Lessee agrees that the Lessor will authorize
one or more employees of the Lessee, designated by the Lessee in writing, as
the authorized representative or representatives of the Lessor to accept
delivery of the Aircraft pursuant to the sale of the Aircraft described in the
Participation Agreement. The Lessee hereby agrees that in the event delivery
of the Aircraft shall be accepted by an employee or employees of the Lessee
pursuant to such authorization by the Lessor, such acceptance of delivery by
such employee or employees on behalf of the Lessor shall, without further act,
irrevocably constitute acceptance by the Lessee of the Aircraft for all
purposes of this Lease.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. [Reserved].
Section 3.02. Basic Rent. The Lessee agrees to pay to the
Lessor in immediately available funds, on each Rent Payment Date, Basic Rent
for the Aircraft during the Basic Term, each payment being set forth on
Schedule II hereto opposite the applicable Rent Payment Date, subject to
increase or decrease as provided in Section 3.04 of this Lease. Each payment
of Basic Rent shall be made in arrears or in advance, all as stated in
ScheduleII hereto. Each payment of Basic Rent designated as advance rent shall
be allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made, other
than the payment of Basic Rent made on the first Rent Payment Date, which shall
be allocated over the period from the Delivery Date to such first Rent Payment
Date and the payment of Basic Rent made on the final Rent Payment Date, which
shall be allocated over the period from the penultimate Rent Payment Date to
the final Rent Payment Date.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or
cause to be paid to the Lessor, or to whomever shall be entitled to it, any and
all Supplemental Rent promptly as the same shall become due. If the Lessee
fails to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay to
the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the Lessee
will pay to the Lessor, as Supplemental Rent, in the case of any prepayment of
the Certificates pursuant to Section 6.02 of the Indenture (except in the case
of any prepayment resulting from an Indenture Event of Default in the absence
of an Event of Default) or any prepayment or purchase of the Certificates
pursuant to clause (ii) of the first sentence of Section 8.02(a) of the
Indenture, an amount equal to the aggregate amount of any Make-Whole Premium
payable on such prepayment or purchase. The expiration or other termination of
the Lessee's obligation to pay Basic Rent shall not limit or otherwise modify
the obligations of the Lessee with respect to the payment of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the Delivery Date. The percentages
for Basic Rent referred to in ScheduleII hereto and the percentages for
Stipulated Loss Value and Termination Value referred to in ScheduleIII and
ScheduleIV hereto, and the EBO Price shall be adjusted (upward or downward)
subject to the minimum value established by Section 3.05 hereof and the
definitions of Stipulated Loss Value and Termination Value to reflect (i) any
costs and expenses paid by the Lessor or the Owner Participant pursuant to
Section 10.01 of the Participation Agreement being greater or less than the
Estimated Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement or (iii) the Delivery Date being other than August 27,
1998. Each such adjustment pursuant to the first sentence of this Section 3.04
shall maintain the Owner's Economic Return (and, while maintaining such Owner's
Economic Return, minimize the aggregate Net Present Value of Rents to the
Lessee) and shall not cause the EBO Price to be less than the greater of (i)
the Termination Value as of such Rent Payment Date and (ii) the estimate set
forth in the Appraisal of the Fair Market Value of the Aircraft at the time of
exercise of the purchase option under Section 4.02(a)(F) hereof. The Owner
Participant shall promptly notify the Lessee and the Lessor and the Lessee
shall promptly notify the Owner Participant and the Lessor of the need for any
such adjustment pursuant to this Section 3.04. As promptly as feasible after
any such notification, the Lessor shall furnish the Lessee with a notice
setting forth the amount of any such adjustments together with the calculations
upon which the adjustments are based; provided, however, that the Lessor and
the Owner Participant shall not be required to disclose to the Lessee in such
notice any confidential or proprietary information (including methodology or
assumptions) relating to such calculations. At the request and, subject to the
next succeeding sentence, expense of the Lessee, the accuracy of the
calculation of such adjustments and the consistency of the calculation with the
calculation used to determine Basic Rent, Stipulated Loss Values, Termination
Values and the EBO Price shall be verified first, by First Chicago Leasing
Corporation or such other financial advisor chosen by the Lessee and second, if
such adjustments are still believed to be in error and are not reconciled with
the Owner Participant within fifteen (15) Business Days, by a firm of
nationally recognized independent public accountants selected by the Lessee and
reasonably acceptable to the Owner Participant and, in order to enable them to
verify such adjustments, the Owner Participant shall make available to such
accountants (for their own confidential use and not to be disclosed to the
Lessee or any other Person and subject to the execution of a confidentiality
agreement reasonably satisfactory to the Owner Participant) all information
reasonably necessary for such verification, including the name of the lease
analysis program used by the Owner Participant to calculate such adjustments.
Notwithstanding anything to the contrary contained herein, the Owner
Participant shall not be required to release its tax returns to any verifying
firm unless such firm is that Owner Participant's regular outside accounting
firm. The Lessee will pay the reasonable costs and expenses of the verification
process under this Section 3.04 unless as a result of such verification process
by the independent public accountants Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by 10 or more basis
points (in which event the Owner Participant shall pay the reasonable costs and
expenses of such verification process). The Lessor and the Lessee shall execute
and deliver an amendment to this Lease to reflect each adjustment under this
Section 3.04.
All adjustments under this Section 3.04 shall be in compliance
with the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715, Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and Section 1.467-3(c)(2)(i) of the Treasury Regulation and shall be
structured so as to not cause the Lease to be a "disqualified leaseback or
long-term agreement" within the meaning of Section 467 of the Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due on each Rent Payment Date and not constituting an Excepted
Payment shall be, under any and all circumstances, an amount at least
sufficient to pay in full any installment of principal of and interest on the
Certificates required to be paid pursuant to the Certificates (other than
amounts becoming due on account of the exercise of remedies pursuant to Article
17 hereof) on such Rent Payment Date.
Section 3.06. Payment to Indenture Trustee. All Rent payable by
the Lessee to the Lessor shall be paid to the Lessor at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration, or as the Lessor may otherwise direct, by wire transfer of
immediately available funds in U.S. Dollars with sufficient information to
identify sources and applications of such funds no later than 10:30 a.m., New
York time on the due date of such payment; provided, however, that so long as
the Lien of the Indenture shall not have been discharged the Lessor hereby
directs, and the Lessee agrees, that all Rent (other than Excepted Payments not
constituting Basic Rent, which shall be paid by the Lessee directly to the
Person entitled thereto) (all without set-off or counterclaim as and to the
extent provided in Article 20 hereof) shall be paid directly to the Indenture
Trustee at its principal office at 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate Trust Department, or as the Indenture Trustee may
otherwise direct by wire transfer of immediately available funds in U.S.
Dollars no later than 10:30 a.m., New York time, on the due date of such
payment. In any case where a scheduled Rent Payment Date shall not be a
Business Day such Rent Payment Date shall be adjourned to the next succeeding
Business Day without interest thereon for the period of such extension
(provided that payment is made on such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or
Purchase. The Lessee shall provide the Lessor with irrevocable written notice
(the "Preliminary Notice") not more than 360 days nor less than 180 days prior
to the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof.
Provided that (i) no Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing at the time of renewal, (ii)
this Lease has not otherwise expired or terminated, and (iii) the Lessee shall
have timely delivered the respective Preliminary Notice, the Lessee may, by
irrevocable written notice delivered to the Lessor not less than 30 days prior
to the end of the Basic Term or any prior Renewal Term, extend the Term for one
or two Fixed Renewal Terms of one (1) year not to exceed two (2) years. The
Lessee shall pay the Fixed Renewal Rent during any Fixed Renewal Term. In
addition, provided that (i) no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing at the time of renewal, (ii) this
Lease has not otherwise expired or terminated, and (iii) the Lessee shall have
delivered the Preliminary Notice, the Lessee may, on no more than two
occasions, by written notice delivered to the Lessor not less than 30 days
prior to the end of the Basic Term or the preceding Renewal Term, as the case
may be, elect to extend the Term for a Renewal Term or further Renewal Term
commencing on the expiration of the Basic Term or the preceding Renewal Term
and ending one or two years thereafter for a rent equal to the then-current
Fair Market Rental of the Aircraft. The Term may be extended pursuant to this
paragraph for an aggregate of no more than two years following the Basic Term
or any Fixed Renewal Term, if applicable.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii)
either no Event of Default shall have occurred and be continuing at the time of
the notice provided below or, if an Event of Default occurs after such notice
has been given, the Lessee shall have provided evidence reasonably satisfactory
to the Lessor and the Owner Participant of its financial ability to purchase
the Aircraft and (iii) the Lessee shall have previously given the Preliminary
Notice under Section 4.01(a) hereof (in the case of paragraph (B) below or, if
a further Renewal Term is available, paragraph (C) below) or the applicable
notice for each other paragraph below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor, the Indenture
Trustee and the Owner Participant, not more than 360 nor less than 90 days
prior to the applicable Rent Payment Date, elect to terminate the Lease
and purchase the Aircraft on the Rent Payment Date falling on either
January 15, 2016 or July 15, 2019, for, at the Lessee's option, either (1)
an amount in immediately available funds equal to the greater of the Fair
Market Value or the Termination Value on such date or (2)(i) the
assumption by the Lessee, pursuant to Section 7.11 of the Participation
Agreement, of all of the obligations of the Lessor under the Indenture,
the Certificates and Section 7.04 of the Participation Agreement and (ii)
the payment to the Lessor of an amount equal to the excess of (A) the
greater of the Fair Market Value or the Termination Value on such date
over (B) the unpaid principal of the Certificates plus accrued interest as
of such date. Such notice (which shall be revocable by the Lessee upon at
least 30 days' written notice prior to the applicable Rent Payment Date)
shall either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant
to Section7.11 of the Participation Agreement; or
(B) by irrevocable written notice delivered to the Lessor and
the Owner Participant not more than 360 nor less than 30 days prior to the
end of the Basic Term, elect to purchase the Aircraft on the last day of
the Basic Term for an amount equal to the Fair Market Value thereof on
such date; or
(C) by irrevocable written notice delivered to the Lessor and
the Owner Participant not more than 360 days nor less than 180 days (30
days if a Preliminary Notice shall have been previously given) prior to
the end of any Renewal Term, elect to terminate the Lease and purchase the
Aircraft on the last day of such Renewal Term at a price equal to the Fair
Market Value of the Aircraft on such day; provided, however, that the
Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D)
which is more particularly described in Schedule V hereto by reference to
this Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value;
(E) exercise the purchase option in this Section4.02(a)(E) which
is more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and the Fair Market
Value; or
(F) to terminate this Lease on January 15, 2018 and purchase the
Aircraft on such Rent Payment Date for an amount equal to the percentage
of the Purchase Price set forth in Ancillary Agreement I with respect to
this Section 4.02(a)(F) ("EBO Price") which amount shall not be less than
the greater of (i) the Termination Value as of such Rent Payment Date and
(ii) the estimate set forth in the Appraisal of the Fair Market Value at
the time of exercise of the purchase option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 360 days and not less than 90 days' prior
written notice of its election to purchase pursuant to Section 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof. Such notice shall either direct the Lessor to
prepay the Certificates in full on such Termination Date pursuant to Section
6.02 of the Indenture or state that the Lessee shall exercise its option to
assume the Certificates pursuant to Section 7.11 of the Participation Agreement
and Section 2.12 of the Indenture. In the event that the Lessee shall have
given notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make payment (and, if
applicable, assume the Certificates) on the applicable Termination Date, the
Lease shall continue and the Lessee shall pay to the Owner Trustee any losses,
costs and expenses of the Owner Participant incurred in connection with such
failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the Lessor
on the applicable Termination Date by wire transfer of immediately available
funds any Basic Rent payable on such Termination Date (if payable in arrears
but not if in advance), the applicable purchase price together with any other
amounts past due hereunder and all other Supplemental Rent then due under this
Lease including, without limitation, the aggregate amount of any Make-Whole
Premium applicable to any Certificate (if such purchase occurs prior to the
Premium Termination Date for such Certificate) and amounts due under the
Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon
discharge of the Lien of the Indenture in accordance with Section 14.01
thereof) the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft on an "as-is, where is" basis. In
connection with such transfer, the Lessee shall prepare and the Lessor shall
execute or arrange for the execution of a bill of sale evidencing such transfer
and such other documents as the Lessee may reasonably require. In connection
with any termination or proposed termination of this Lease, the Lessee shall
pay, at the time of the applicable Termination Date, all related reasonable
costs and expenses of the Owner Participant, the Lessor and the Indenture
Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever
Fair Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Schedule I hereto. If the Lessee and the Lessor cannot agree by
the date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee and
the Lessor shall be entitled to submit to the appraisers (and shall submit to
each other any bids submitted to the appraisers) any bids from unrelated third
parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant
to this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two nationally
recognized, independent aircraft appraisers, one chosen by the Lessor and one
chosen by the Lessee, or, if such appraisers cannot agree on the amount of such
appraisal, their appraisals shall be treated in the manner described in Section
4.03(c) hereof with an appraisal arrived at by a third nationally recognized,
independent aircraft appraiser chosen by the mutual consent of such two
appraisers; provided, however, that if either party shall fail to appoint an
appraiser within fifteen (15) Business Days after a written request to do so by
the other party, or if such two appraisers cannot agree on the amount of such
appraisal and fail to appoint a third appraiser within twenty (20) Business
Days after the date of the appointment of the second of such appraisers, then
either party may initiate an arbitration proceeding with the American
Arbitration Association for purposes of appointing a nationally recognized,
independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined
by such appraiser shall be final and binding upon the Lessor and the Lessee.
If two appraisers are chosen, one appraiser by the Lessor and one by the
Lessee, and such appraisers agree on the value, such value shall be final and
binding upon the Lessor and the Lessee. If three appraisers shall be appointed
and the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such farther determination
shall be excluded, the remaining two determinations shall be averaged, and such
average shall be final and binding upon the Lessor and the Lessee. Otherwise,
the average of all three determinations shall be final and binding upon the
Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section
4.03 shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03 and
the definitions of Fair Market Value and Fair Market Rental. All expenses of
any independent appraisal shall be borne by the Lessee, except that each of the
Lessee and the Owner Participant (in the case of the Lessor) shall bear any
fees, costs and expenses of its respective attorneys in connection with such
appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED,
AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR
ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE
AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR
ANY SUBLESSEE'S RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN
ARTICLE 18 HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL
RISKS INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE
LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE
BORNE BY THE LESSEE. The provisions of this Section 5.01 have been negotiated
by the Lessor and the Lessee and, except as provided in Article 7 of the
Participation Agreement, are intended to be a complete exclusion and negation
of any representations or warranties of the Lessor, the Indenture Trustee and
the Owner Participant, express or implied, with respect to the Airframe and
each Engine that may arise pursuant to any law now or hereafter in effect, or
otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer or
the Engine Manufacturer or any of their respective subcontractors or suppliers,
with respect to the Airframe, the Engines or any Parts incorporated or
installed in or attached to the Airframe or Engines, or to release the Lessee,
AVSA, the Manufacturer or the Engine Manufacturer or any of their respective
subcontractors or suppliers from any such representation, warranty or
obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall assign
or otherwise make available to the Lessee such rights as the Lessor may have
under any warranty, patent indemnity, or service-life policy made or given by
the Manufacturer, AVSA or the Engine Manufacturer or any of their respective
subcontractors or suppliers, and any other claims against the Manufacturer,
AVSA and the Engine Manufacturer or any such subcontractor or supplier with
respect to the Aircraft, including all rights to demand, accept and retain all
rights in and to property (other than the Aircraft), data and services of any
kind which the Manufacturer, AVSA and the Engine Manufacturer are obligated to
provide and do provide pursuant to the Purchase Agreement or the GTA with
respect to the Aircraft; and (ii) all payments pursuant to any manufacturer's
or subcontractor's warranty, patent indemnity, or service-life policy
obligation shall be paid to the Lessee and the Lessee shall apply such payments
to the cost of repair or correction of any condition of the Aircraft which gave
rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee
agrees with the Lessor for the benefit of the Owner Participant that the Lessee
shall perform the agreements, covenants and indemnities of the Lessee set forth
in the Participation Agreement to the extent the same are applicable to the
Owner Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the Airframe
or any Engine or any Part or title thereto or any interest therein except:
(a) the respective rights of the Lessor and the Lessee as
provided in this Lease, the security interest and Lien of the Indenture
and the rights of the Owner Participant, the Lessor and the Indenture
Trustee under the Trust Agreement, the Indenture and the Participation
Agreement;
(b) the rights of any sublessee or transferee or other Person
under a sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for Taxes imposed against the Lessee either not yet
due or being contested in good faith by appropriate proceedings so long as
such Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal
charges against the Lessor, the Owner Participant, the Indenture Trustee
or any Holder;
(e) materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising against the Lessee in the ordinary
course of the Lessee's business for amounts the payment of which is either
not yet due or is being contested in good faith by appropriate proceedings
so long as such Liens or proceedings do not involve any material danger of
the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the
Airframe or any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee
with respect to which (i) at the time an appeal or proceeding for review
is being prosecuted in good faith and with respect to which there shall
have been secured a stay of execution pending such appeal or proceeding
for review and then only for the period of such stay and (ii) there is
not, and such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The
Lessee, at its own cost and expense, shall:
(a) upon payment by the Lessor of the Purchase Price on the
Delivery Date, cause the Aircraft to be duly registered in the name of the
Lessor as owner, pursuant to the Transportation Code and, subject to the
proviso to Section 6.03(b) of the Participation Agreement, to remain at
all times duly registered pursuant to the Transportation Code and at all
times act in accordance with the rules and regulations of the Aeronautics
Authority or the applicable laws, rules and regulations of any other
jurisdiction in which the Aircraft may then be registered in accordance
with Section 6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and
any engine which is not an Engine but is installed on the Aircraft) in as
good operating condition as when delivered to the Lessor on the Delivery
Date, ordinary wear and tear excepted, and in any event (i) in accordance
with the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the
same care used by the Lessee with respect to other A300-600 series
aircraft and CF6-80C2- A5F series engines (or other engines permitted by
the terms of this Lease to be used on the Aircraft) owned, operated or
leased by the Lessee, to the extent that the same regulations, and the
Lessee's FAA-approved maintenance program shall apply to any such aircraft
and related engines, owned or leased by the Lessee, and utilized in
similar circumstances, and without discriminating against the Aircraft,
with respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft
for return to the Lessor upon such expiration or termination, and (iii) so
as to keep the Aircraft in such condition as may be necessary to enable
its airworthiness certification to be maintained in good standing at all
times under the Transportation Code or any applicable rule or regulation
of the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered;
(c) maintain, or cause to be maintained, all records, logs and
other materials in respect of the Aircraft required by the Aeronautics
Authority, or the applicable regulatory agency or body of any other
jurisdiction in which the Aircraft may then be registered, all such
records and logs to be maintained in the English language, to the extent
required by the Transportation Code (which records, logs and other
materials shall, as between the Lessor and the Lessee and all parties
claiming through the Lessee, be the property of the Lessor but shall
become the property of the Lessee upon purchase by the Lessee of the
Aircraft pursuant to the terms of this Lease or upon the occurrence of an
Event of Loss and the Lessee's compliance with Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental
authority having jurisdiction over the Lessee or the Aircraft or any
Engine or for any purpose for which the Aircraft or any Engine is not
designed; provided, however, that the Lessee (or if a sublease shall then
be in effect, the sublessee thereunder) may in good faith contest the
validity or application of any such law, license, rule, regulation or
order in any manner that does not adversely affect the Lessor, its right,
title or interest in the Aircraft or any Engine or the interests of the
Indenture Trustee or the Owner Participant therein, or in any Operative
Agreement (excluding any interests indemnified for under the Tax Indemnity
Agreement) and such contest or non-compliance will not result in any
material risk of loss, forfeiture or damage to the Aircraft or in any risk
of criminal liability to the Lessor, the Indenture Trustee or the Owner
Participant; and if any such law, license, rule, regulation or order
requires alteration of the Aircraft or any Engine, the Lessee will conform
the same therewith at its own cost and expense and will maintain the
Aircraft or any Engine in compliance with such law, license, rule,
regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer
the Airframe or any Engine to be operated or located (x) in any area
excluded from coverage by any insurance policy required by the terms of
Article 13 hereof or (y) in any war zone or in the Lessee's reasonable
judgment, area of recognized hostilities, unless the Lessee has obtained,
prior to the operation or location of the Airframe or any Engine in such
area, indemnification from the Government, or other insurance, against the
risks and in the amounts required by, and in compliance with, Article 13
hereof covering such area (except, in the case of a requisition for use by
the Government, to the extent that the Lessee certifies that such
insurance is unobtainable after diligent effort or is obtainable only at
unreasonably high rates or on unduly financially burdensome terms and
conditions) (and naming the Lessor, or so long as this Lease is assigned
to the Indenture Trustee, the Indenture Trustee, as sole loss payee in
respect of indemnification or insurance payable in respect of casualties
to the Aircraft) or unless the Aircraft is only temporarily located in
such area as a result of an isolated occurrence attributable to a
hijacking, medical emergency, equipment malfunction, weather conditions,
navigational error or other similar unforeseen circumstances and the
Lessee is using its good faith efforts to remove the Aircraft from such
area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to the
Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease.
(a) Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing, (ii) the Lien of the Indenture is not impaired thereby, (iii) all
applicable governmental approvals in connection therewith have been obtained
and (iv) the Lessee shall comply with the provisions of Article 13 hereof, the
Lessee may without the prior written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on
the date the sublease is entered into (and on the date of notice from the
Lessee) and with 30 days' prior written notice to the Lessor and the Owner
Participant, (A) sublease the Aircraft or any Engine to a U.S. Air
Carrier, (B) sublease the Aircraft or any Engine to an Air Carrier which
is principally based in and domiciled in one of the countries listed on
Schedule III of the Participation Agreement, (C) sublease the Aircraft or
any Engine to an Air Carrier that is principally based in and a
domiciliary of a country which is a party to the International Convention
on the Recognition of Rights in Aircraft, or (D) sublease the Aircraft or
any Engine to any other Air Carrier not described in this Section which
shall be reasonably acceptable to the Lessor as evidenced by its prior
written consent; provided, that, with respect to clauses (B) and (C)
above, at the time of any such sublease the United States of America
maintains full diplomatic relations with the country in which such Air
Carrier is principally based and domiciled. In the case of any sublease
(x) such sublease shall include the provisions required by Section 7.02(b)
hereof and expressly require the sublessee to operate and maintain the
Aircraft in compliance with the applicable provisions of this Lease, (y)
such sublease shall provide that such sublessee will not transfer
possession of, or any other rights to, the subleased Airframe or any
Engine to any other Person without the prior written consent of the Lessor
(except as permitted by subparagraphs (ii) through (viii) below) and (z)
such sublease shall expire not later than the expiration of the Basic Term
or any applicable Renewal Term hereof. Prior to any sublease to an Air
Carrier permitted under Section 7.02(a)(i)(C): (I) the maintenance
standards of the aeronautical authority of the country of domicile or
principal operation of the sublessee taken as a whole shall not be
materially less stringent than those of the FAA and the sublease will
provide that the maintenance performed during such sublease will meet in
all material respects such maintenance standards; (II) the Lessee will
provide opinions of counsel (such counsel and the form and substance of
such opinions to be reasonably satisfactory to the Lessor and the
Indenture Trustee) with respect to (A) the legality, validity and
enforceability of the Operative Agreements and the sublease in such
country, (B) that the laws of such country require fair compensation by
the government of such country payable in a currency freely convertible
into U.S. dollars for the loss of the use of or title to the Aircraft in
the event of a requisition of use or title by such government, (C) the
Lessor's title to the subleased equipment will be recognized, (D) the
required agreement of such foreign air carrier that its rights under the
sublease are subject and subordinate to all the terms of this Lease is
enforceable against such foreign air carrier under applicable law (subject
only to customary exceptions to enforceability), (E) that it is not
necessary for the Owner Participant, the Lessor or the Indenture Trustee
to register or qualify to do business in such country as a result of the
proposed sublease or in order for the Owner Participant, the Lessor or the
Indenture Trustee to enforce the terms and conditions of the Operative
Agreements, (F) there is no tort liability of the owner of an aircraft not
in possession thereof or of Persons lending money to such an owner for the
purchase of an aircraft, under the laws of such jurisdiction other than
tort liability which might have been imposed on such owner or Persons
under the laws of the United States or any state thereof (it being
understood that, in the event that such latter opinion cannot be given in
a form satisfactory to the Lessor, such opinion shall be waived if
insurance reasonably satisfactory to the Lessor is available to cover such
risk to the Owner Participant and is provided at or before the execution
of such a sublease, at the Lessee's cost and expense) and (G) that there
exist no possessory rights in favor of such sublessee under the laws of
such country which would, upon bankruptcy or insolvency of the Lessee (and
assuming that at such time such sublessee is not bankrupt or insolvent)
prevent the return of the Aircraft in accordance with the terms of this
Lease; (III) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (IV) duties and tariffs, if applicable,
shall be paid for by the Lessee; and (V) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required to continue the Lessor's right, title and
interest to the Aircraft and rights under the Lease (and sublease) and to
perfect and maintain the priority of the Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected
to normal interchange agreements or subject the Engines or permit any
Engine to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United
States maintains full diplomatic relations or (x) any U.S. Air Carrier or
(y) any foreign Air Carrier which is (I) organized in a country listed on
Schedule III to the Participation Agreement, (II) organized in a country
with which the United States then maintains full diplomatic relations,
(III) is a party to the Convention on the International Recognition of
Rights in Aircraft or (IV) otherwise provides equivalent protection to
owners, lessors and mortgagees of aircraft; provided that no transfer of
the registration of the Airframe or any Engine shall be effected and that
throughout the period that the Airframe or any Engine is subjected to such
interchange or pooling agreement or arrangement the terms of this Lease
shall be observed; and provided, further, that no such agreement or
arrangement contemplates or requires the transfer of title to or
registration of the Airframe or any Engine, and if the Lessor's title to
any Engine shall nonetheless be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and the Lessee shall comply with Section 11.04 of
this Lease in respect of such Engine;
(iii) deliver or permit the delivery of possession of the
Airframe or any Engine to their respective manufacturers or certified
maintenance providers for testing, service, repair, maintenance or
overhaul work or for alterations or modifications in or additions to the
Airframe or any Engine to the extent required or permitted by the terms of
Article 9 hereof;
(iv) transfer or permit the transfer of possession of the
Airframe or any Engine pursuant to a contract or agreement with the
Government or pursuant to the Civil Reserve Air Fleet Program administered
pursuant to Executive Order No. 12056, as amended ("CRAF Program"), or any
similar or substitute programs of the Government, so long as the Lessee
(or any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide
the Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of
the Aircraft, provided, that if such transfer of possession continues
beyond the end of the Basic Term or the then-current Renewal Term, the
Basic Term or the Renewal Term, as applicable, shall be automatically
extended (including the obligation to pay Rent per diem at a rate equal to
the Fair Market Rental or such higher compensation being paid by the
Government pursuant to the CRAF Program) for six (6) months after the end
of the Term (or, if shorter, until the date of return of the Aircraft, so
long as the Lessor receives at least six (6) months' notice of such date
of return);
(v) install or permit the installation of an Engine on an
airframe which is owned by the Lessee or any permitted sublessee free and
clear of all Liens, except (A) Liens of the type permitted under Section
6.01 hereof, (B) Liens which apply only to the engines (other than an
Engine), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe and which do not apply to substantially all of such airframe and
(C) the rights of an Air Carrier under normal interchange or pooling
agreements which are customary in the airline industry and do not
contemplate or require the transfer of title to such airframe or the
engines installed on it;
(vi) install or permit the installation of an Engine on an
airframe leased to the Lessee or any permitted sublessee or transferee or
purchased by the Lessee subject to a conditional sale or other security
agreement, provided that (A) such lease, conditional sale or other
security agreement does not cover the Engine so installed and the Lessee
shall have received from the lessor, conditional vendor or secured party
of such airframe an agreement (which may be the lease or conditional sale
or other security agreement covering such airframe), whereby such lessor,
conditional vendor or secured party expressly agrees that neither it nor
its successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such
airframe at any time, and (B) such airframe is and remains free and clear
of all Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and Liens of the
type permitted by subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an
airframe owned by the Lessee, leased to the Lessee or purchased by the
Lessee subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has
effective control of the Aircraft in the ordinary course of the Lessee's
business which shall not be considered a transfer of possession hereunder,
provided that the Lessee's obligations under this Lease shall continue in
full force and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of
Section 7.02(a) hereof, the rights of any transferee who takes possession of
the Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease or
wet lease permitted by Section 7.02(a) hereof shall be made expressly subject
and subordinate to, all the terms of this Lease, including, without limitation,
the Lessor's right to repossession pursuant to Article 17 hereof and to avoid
such sublease upon such repossession, and the Lessee shall remain primarily
liable for the performance of all the terms of this Lease to the same extent as
if such sublease or transfer had not occurred. Any such sublease shall include
appropriate provisions for the maintenance, inspection (as required by Section
14.01 hereof), operation, use and insurance of the Aircraft, the Airframe and
each Engine in accordance with the provisions of this Lease and shall provide
assurances reasonably satisfactory to the Lessor that the sublessee may not
further sublease any of such equipment. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee 10 Business Days' prior written
notice of any sublease of the Airframe with a term in excess of one year. The
Lessee shall promptly provide the Lessor, the Owner Participant and the
Indenture Trustee a copy of any sublease which has a term in excess of one year
(and, if so requested by the Lessor, a copy of any other sublease) and, prior
to execution and delivery of any sublease deliver to Lessor all other documents
required hereunder relating to such sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this Lease,
the Participation Agreement or the Tax Indemnity Agreement or constitute a
waiver of any of the Lessor's rights and remedies hereunder or thereunder or
extend beyond the end of the Term (except as provided in Section 7.02(a)(iv)
hereof). Subject to the terms and conditions of this Lease, the Lessee will
retain the right to cure any default by any sublessee permitted pursuant to
this Section 7.02 and to terminate such sublease upon such default. The Lessee
shall pay all costs of the Owner Participant, the Indenture Trustee and the
Lessor incurred in connection with any subleasing or proposed subleasing.
(d) Certain Notifications. Prior to any sublease of the
Aircraft pursuant to Section 7.02(a) hereof, the Lessee shall deliver to
Moody's written notice identifying the Aircraft to be subleased, together with
the name of the sublessee and the country of domicile of such sublessee. In
connection with any sublease to an Air Carrier permitted under Section
7.02(a)(i)(C) hereof the Lessee shall, if so requested by Moody's, provide
Moody's with the opinions to be provided pursuant to Section 7.02(a)(i)(II)
hereof and information on the insurance coverage referred to in Section
7.02(a)(i)(II)(F) hereof.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location, and
on each Engine, a clearly visible metal nameplate bearing the inscription
"STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines
shall be subject to the Lien of the Indenture, the additional inscription
"FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE"
(such nameplate to be replaced, if necessary, from time to time, with a
nameplate reflecting the name of any successor Lessor or successor Indenture
Trustee, in each case as permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a)
hereof, the Lessee will not allow the name of any Person to be placed on the
Airframe or on any Engine as a designation that might be interpreted as a claim
of ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it in
some other appropriate manner for convenience of identification of the Lessee's
interest or the interest of any permitted sublessee (including but not limited
to the Lessee's or any permitted sublessee's customary colors and insignia) and
to bear insignia plates or other markings identifying the supplier or
manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a)Generally. The Lessee,
at its own cost and expense, will replace or cause to be replaced as promptly
as practicable all Parts which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine and which may from time
to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the ordinary
course of maintenance, service, repair, overhaul or testing, any Parts, whether
or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that the Lessee, except
as otherwise provided in Sections 9.01 or 9.02 hereof, will, at its own cost
and expense, replace such Parts as promptly as practicable. All replacement
parts shall be free and clear of Liens (except for pooling arrangements to the
extent permitted by Section 8.02 hereof and Liens permitted under Section 6.01
hereof) and shall be in at least as good operating condition as, and shall have
a value and utility at least equal to, the Parts replaced, and in any event not
less than the condition and repair required to be maintained by the provisions
of this Lease.
(b) Title. All Parts at any time removed from the Airframe or
any Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a replacement
part subject to a pooling arrangement) becoming incorporated or installed in or
attached to the Airframe or any Engine, and without further act:
(i) title to the replaced Part shall vest in the Lessee, free
and clear of all rights of the Lessor, and such replaced Part shall no
longer be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor
free and clear of all Liens (except for Liens permitted by Section 6.01
hereof) and shall thereupon be and become a Part; and
(iii) such replacement part shall become subject to this Lease
and to the Lien of the Indenture, and shall be deemed part of the Airframe
or such Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the
Airframe or any Engine as permitted in Section 8.01(a) hereof may be subjected
by the Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor
in accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or
installing in or attaching to the Airframe or such Engine a further
replacement part owned by the Lessee free and clear of all Liens (other
than Liens permitted under Section 6.01 hereof) and by causing title to
such further replacement part to vest in the Lessor in accordance with
Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall
meet the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The
Lessee, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Airframe and each Engine
as may be required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's or any sublessee's operations and aircraft; provided,
however, that the Lessee or sublessee, as the case may be, may in good faith
contest the validity or application of any such requirements in any reasonable
manner that does not involve any material risk of civil liabilities (unless
indemnified by the Lessee) or any risk of criminal penalties being imposed on
or against the Indenture Trustee, the Owner Participant or the Lessor, that
does not involve any material risk or danger of loss, forfeiture or sale of the
Aircraft or any Engine and that does not adversely affect the Lessor, its title
or interest in the Aircraft or any Engine, the first and prior perfected Lien
and security interest of the Indenture, or the interests of the Indenture
Trustee or the Owner Participant in the Airframe or any Engine, or in any
Operative Agreement (excluding any interests indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at such
time and in such a manner so as not to discriminate against the Aircraft
whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a)
Generally. The Lessee, at its own cost and expense, may from time to time make
such alterations and modifications in and additions to the Airframe or any
Engine as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts, provided that no such
alteration, modification, addition or removal, individually or in the
aggregate, shall create any adverse tax consequences for the Owner Participant
not otherwise indemnified for, diminish the value, remaining useful life, or
utility of the Airframe or the value or utility of any Engine or impair its
condition or state of airworthiness below its value, remaining useful life (in
the case of the Airframe only), utility, condition and state of airworthiness
immediately prior to such alteration, modification, addition or removal,
assuming that the Airframe or such Engine was then in the condition and state
of airworthiness required to be maintained by the terms of this Lease, or cause
the Airframe or any Engine to become "limited use property" within the meaning
of Revenue Procedure 76-30, 1976-2 C.B. 647, except that the value (but not the
remaining useful life, utility, condition or state of airworthiness) of the
Aircraft may be reduced by the value, if any, of any such Obsolete Parts which
shall have been removed; provided that in no event shall the aggregate value of
all such Obsolete Parts which shall have been so removed and not replaced
exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated
or installed in or attached or added to the Airframe or any Engine as the
result of any alteration, modification, removal or addition made pursuant to
Section 9.01 or 9.02(a) hereof shall without further act vest in the Lessor and
become subject to this Lease; provided, however, that the Lessee may remove any
such Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed
in or attached or added to the Airframe or such Engine pursuant to the
terms of Article 7 hereof or the first sentence of Section 9.01 hereof;
and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or state of airworthiness or remaining useful life of the
Airframe required to be maintained by the terms of this Lease or (B)
diminishing the value, utility or remaining useful life (in the case of
the Airframe) or the value and utility (in the case of such Engine) which
the Airframe or such Engine would have had at such time had such
alteration, modification, removal or addition not occurred, assuming the
Airframe or such Engine was then in the condition required to be
maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of
any such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a Part.
Any Part not removed by the Lessee as above provided prior to the return of the
Aircraft to the Lessor hereunder shall remain the property of the Lessor and
subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or
Surplus. (a) Option to Terminate. So long as no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, the Lessee
shall have the right, at its option, on any Termination Date, on at least 180
days' prior written notice (which notice shall state the proposed Termination
Date (the "Proposed Termination Date")) to the Lessor and the Owner Participant
to terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is obsolete
or surplus to its needs. Unless the Lessor has elected to retain the Aircraft
as herein provided, the Lessee shall on no more than two occasions have the
right to revoke its notice of termination not less than ten (10) days prior to
the Proposed Termination Date whereupon this Lease shall continue in full force
and effect; provided that the Lessee may not revoke its notice if a cash bid
which is for an amount greater than or equal to Termination Value has been
submitted for the purchase of the Aircraft.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non- exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of the
Aircraft. On the Proposed Termination Date, the Engines shall be installed on
the Airframe (provided that the Airframe may be sold with engines meeting the
requirements set forth herein for Replacement Engines in lieu of the Engines so
long as the aggregate number of Engines and Replacement Engines being sold with
the Airframe equals two). The Lessor may, if it desires to do so, seek to
obtain such bids. The Owner Participant shall not inspect any bids received by
the Lessee with respect to the Aircraft, unless the Owner Participant has given
to the Lessee binding and irrevocable notice that neither the Owner Participant
nor any of its Affiliates nor any Person acting for the Owner Participant or
such Affiliate will submit a bid for the purchase of the Aircraft and if such
notice has been given, the Lessee will provide the Lessor with copies of bids
received by the Lessee. No bid may be submitted by the Lessee or any Person
affiliated with the Lessee (or with whom or which there is any arrangement or
understanding as to the subsequent use of the Aircraft by the Lessee or any of
its Affiliates) or any agent or Person acting on behalf of the Lessee. The
Lessee may reject any bid which is less than the sum of the applicable
Termination Value, the aggregate amount of any Make-Whole Premium and all other
expenses incurred by the Lessor, the Owner Participant and the Indenture
Trustee in connection with the sale. Subject to the provisions of Section
10.02 hereof, on the Proposed Termination Date or such earlier date of sale as
shall be consented to in writing by the Lessor, the Lessee shall deliver the
Airframe which shall have the Engines installed on it (provided that the
Airframe may be delivered with installed engines meeting the requirements set
forth herein for Replacement Engines in lieu of the Engines so long as the
aggregate number of Engines and Replacement Engines being delivered with the
Airframe equals two and the Lessee shall comply with the provisions of Section
11.04 hereof as if an Event of Loss occurred with regard to the Engines) to the
bidder which shall have submitted the highest cash bid (whether certified to
the Lessor by the Lessee or directly received by the Lessor and certified to
the Lessee) in the same manner as if delivery were made to the Lessor pursuant
to Article 12 hereof, at a location specified by such bidder, and shall duly
transfer to the Lessor title to any such engines not owned by the Lessor, and
the Lessor shall, upon payment in full of the bid price and all amounts due and
owing pursuant to Section 10.01(c) hereof by wire transfer of immediately
available funds and upon discharge of the Lien of the Indenture in accordance
with Article XIV thereof, sell the Airframe and Engines or engines to such
bidder without recourse or warranty (except as to the absence of Lessor's
Liens).
(c) Payments to the Lessor. The total selling price realized at
a sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales Price")
shall be retained by the Lessor (or the Indenture Trustee as long as the
Indenture is in force) and, in addition, on or before the Proposed Termination
Date, the Lessee shall pay to the Lessor (or the Indenture Trustee as long as
the Indenture is in force), by wire transfer of immediately available funds,
the sum of:
(i) the excess, if any, of the Termination Value for the
Aircraft computed as of the Proposed Termination Date over the Net Sales
Price; plus
(ii) the installment of Basic Rent due with respect to the
Aircraft on the Proposed Termination Date if payable in arrears but not if
payable in advance; plus
(iii) all other amounts then due and payable by the Lessee
(including, without limitation, the aggregate amount of any Make-Whole
Premium, if the Proposed Termination Date occurs prior to the applicable
Premium Termination Date) under this Lease and any other Operative
Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the
amounts described in Section 10.01(c) hereof and upon transfer to the Lessor of
title to engines which have been returned in lieu of Engines as provided in
Section 10.01(b) hereof, and upon payment of all other amounts then due under
this Lease, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to any Engines which were replaced with
engines pursuant to Section 10.01(b) hereof, and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be
under no duty to solicit bids, to inquire into the efforts of the Lessee to
obtain bids or otherwise to take any action in connection with any such sale
other than to transfer to the purchaser named in the highest cash bid
(determined as described in Section 10.01(b) above) as referred to above (or to
such purchaser and to the Lessee, as the case may be), without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft, against receipt by the Lessor
of the payments provided for.
(f) Termination of the Lessee's Obligations. Upon the sale of
the Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee
with the further provisions of this Article 10, the obligation of the Lessee to
pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment
Date occurring after the Proposed Termination Date and the Term shall end
effective as of the Proposed Termination Date. If no sale shall have occurred
on or before the Proposed Termination Date, this Lease shall continue in full
force and effect and, for purposes of Section 10.01(a) hereof, it shall be
deemed that the Lessee has rescinded its notice of termination, and the Lessee
shall pay the expenses incurred by the Lessor, the Indenture Trustee and the
Owner Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a)
Generally. Notwithstanding Section 10.01 hereof, the Lessor may, subject to
Section 10.02(b) hereof, elect to retain the Aircraft after receipt of the
Lessee's notice of termination given in accordance with Section 10.01(a)
hereof, by giving the Lessee and the Indenture Trustee written irrevocable
notice of such election not less than thirty (30) days prior to the Proposed
Termination Date. If the Lessor so elects, the Lessee shall pay to the Lessor
on the Proposed Termination Date, by wire transfer of immediately available
funds the sum of:
(i) the installment of Basic Rent due with respect to the
Aircraft on the Proposed Termination Date if payable in arrears but not if
payable in advance; plus
(ii) all other amounts then due and payable by the Lessee under
this Lease and any other Operative Agreement, including the aggregate
amount of any Make- Whole Premium (if the Proposed Termination Date occurs
prior to the applicable Premium Termination Date), on or prior to the
Payment Date.
(b) Payment of the Certificates. It shall be an absolute
condition precedent to the Lessor's right to retain the Aircraft and to the
termination of the Term pursuant to this Section 10.02 that the Lessor (or the
Lessee to the extent set forth in Section 10.02(a) hereof) shall have paid to
the Holders and such Holders shall have received the entire outstanding
principal amount of, the aggregate amount of any Make-Whole Premium and accrued
interest on the Certificates on the Proposed Termination Date and all other
sums due and owing to the Indenture Trustee and the Holders on or prior to the
Proposed Termination Date under this Lease, the Indenture or any other
Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the
Lessor elects to retain the Aircraft pursuant to this Section 10.02, the Lessee
shall deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to Section
10.02(a) hereof, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to any Engines which were replaced by engines
pursuant to this Section 10.02(c), and shall deliver to the Lessee such
instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by
the Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Proposed Termination Date
and the Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall
notify the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the occurrence
of an event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within 60
days of the occurrence of any Event of Loss, the Lessee shall have the right to
elect the alternative set forth in Section 11.02 hereof or the alternative set
forth in Section 11.03 hereof. The Lessee's failure to make such election
within said 60-day period shall be deemed to be an election of the alternative
set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section 11.01
hereof, pay to the Lessor, by wire transfer of immediately available funds on
the earlier of (i) the third Business Day following receipt in full of
insurance proceeds or requisition proceeds, described in Section 11.05 hereof,
in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination Date
next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a
Stipulated Loss Value Determination Date, determined as of such Stipulated Loss
Value Determination Date) together with interest on such amount at the Debt
Rate from such Stipulated Loss Value Determination Date to the Loss Payment
Date, plus (B) any and all Basic Rent due and payable on or prior to the
relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any and
all Supplemental Rent due and payable on or prior to such Loss Payment Date,
plus (D) all other amounts owing by the Lessee or the Owner Trustee to the
Indenture Trustee or the Holders under the Indenture and the other Operative
Agreements, plus (E) any reasonable out-of-pocket expenses incurred in
connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee,
minus (F) if the relevant Stipulated Loss Value Determination Date is a Rent
Payment Date, the portion, if any, of the Basic Rent installment due and paid
by the Lessee on such Stipulated Loss Value Determination Date pursuant to
Section 3.02 hereof to the extent such Basic Rent installment (or portion
thereof) is designated on Schedule II hereto as being payable in advance,
together with an imputed interest amount in respect of such advance payment of
Basic Rent (or portion thereof) at the Debt Rate from the date of payment of
such Basic Rent installment (or portion thereof) by the Lessee to the Loss
Payment Date; provided that in no event shall there be subtracted pursuant to
clause (F) an amount such that the Holders shall not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full
of the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing the Aircraft from the Lien
of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a)
Generally. So long as no Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing, and subject to Section 11.01
hereof, if the Lessee has elected to replace the Airframe and Engines suffering
an Event of Loss pursuant to this Section 11.03, the Lessee shall cause to be
duly conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300-600 series airframe manufactured no earlier than
January 1, 1997 (the "Replacement Airframe") and good and marketable title to a
number of Replacement Engines equal to the number of Engines with respect to
which an Event of Loss has occurred, provided that following compliance with
all other terms of this Section 11.03 each Engine shall be of identical make
and model and, in the case of such Replacement Airframe and each such
Replacement Engine, owned by the Lessee free and clear of all Liens not
excepted in Sections 6.01(a), (b), (c) and (e) hereof, duly certified as an
airworthy aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be maintained
by the terms of this Lease immediately prior to the occurrence of such Event of
Loss. In such case and as a condition to such substitution the Lessee, at its
own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the
Lessor with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment
in form and substance satisfactory to the Lessor and the Indenture Trustee
of any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii) cause such Replacement Airframe and Replacement Engines to
be duly registered in the name of the Lessor pursuant to the
Transportation Code or the applicable laws of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(iii) cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Transportation Code, or the applicable laws,
rules and regulations of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 6.03(b) of the Participation
Agreement;
(iv) furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines
have a utility and, in the aggregate, value, at least equal to, and are in
as good operating condition as, the Airframe and Engines replaced,
assuming such Airframe and Engines were in the condition and repair
required by the terms of this Lease immediately prior to the occurrence of
such Event of Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement
Engines;
(vi) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that the
Owner Participant and the Lessor will suffer no adverse tax consequence
not otherwise indemnified for as of the Delivery Date as a result of such
substitution or (B) an indemnity reasonably acceptable to the Lessor and
the Owner Participant against such consequences, which indemnity shall be
bonded or otherwise secured to the reasonable satisfaction of the Lessor
and the Owner Participant, together with an opinion of counsel (otherwise
complying with clause (vi)(A) above) that there is Substantial Authority
(as defined in the Tax Indemnity Agreement) that neither the Owner
Participant nor the Lessor will suffer any adverse tax consequences as a
result of such substitution or, at the Lessee's discretion, a More Likely
than Not Opinion (as so defined) to the same effect;
(vii) comply with the provisions of Section 9.08 of the
Indenture;
(viii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Airframe and Replacement Engines to be duly
executed by the Lessor and the Indenture Trustee and recorded pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Lien of the Indenture shall constitute a first priority, duly
perfected Lien and security interest on and in respect of such Replacement
Airframe and Replacement Engines;
(ix) take such other action, including the filing of UCC
financing statements naming the Indenture Trustee as a secured party with
the Secretary of State of Connecticut and the filing of a notice with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Airframe and
Replacement Engines shall be duly and properly titled in the Lessor,
leased under this Lease and subjected to the Lien of the Indenture to the
same extent as the replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant
and the Indenture Trustee) of counsel to the Lessee (which may be the
Lessee's General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien
of the Indenture (with the effect and result that the Indenture
constitutes a first priority duly perfected security interest and Lien on
such Replacement Airframe and Replacement Engines); and
(xi) cause to be delivered to the Lessor, the Owner Participant
and the Indenture Trustee an opinion of counsel to the Lessee addressed to
the Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee
with the terms of Section 11.03(a) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a bill of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the Airframe
when such Event of Loss occurred, shall continue to be property of the Lessor
and leased under this Lease as part of the same equipment as the Replacement
Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement
Engine shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values but may result in payments pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed
under this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for the
Engine with respect to which such Event of Loss occurred, good and marketable
title to a Replacement Engine, free and clear of all Liens not excepted in
Sections 6.01(a), (b), (c) and (e) hereof and having a value and utility at
least equal to, and being in as good operating condition as, the Engine with
respect to which such Event of Loss occurred, assuming such Engine was of the
value and utility and in the condition and repair required by the terms of this
Lease immediately prior to the occurrence of such Event of Loss, provided that
after any replacement, both Engines shall be of identical make and model and
any Replacement Engines of a different manufacturer than the original Engines
shall be then commonly in use in the commercial aviation industry on Airbus
A300-600 series airframes. The standards set forth in this Section with
respect to Replacement Engines shall apply upon any replacement or substitution
of an Engine with a Replacement Engine pursuant to any other provision of this
Lease.
(b) Conditions Precedent. Prior to or at the time of any
conveyance of an Engine pursuant to Section11.04(a) hereof, the Lessee, at its
own cost and expense will:
(i) furnish the Lessor with an original of, and the Indenture
Trustee with a copy of, a full warranty bill of sale, in form and
substance satisfactory to the Lessor, with respect to such Replacement
Engine together with an assignment in form and substance satisfactory to
the Lessor and the Indenture Trustee of any and all manufacturer's
warranties applicable thereto and a consent reasonably satisfactory to the
Lessor and the Indenture Trustee from such manufacturer to such
assignment;
(ii) cause a Lease Supplement covering such Replacement Engine
to be duly executed by the Lessee and filed for recordation pursuant to
the Transportation Code, or the applicable laws, rules and regulations of
any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement and, if the
Engine being replaced was registered under the applicable laws of the
jurisdiction in which the Aircraft is then registered, the Replacement
Engine shall be registered in the same fashion;
(iii) furnish the Lessor and the Indenture Trustee with a
certificate of a nationally recognized aircraft appraiser reasonably
satisfactory to the Lessor and the Indenture Trustee certifying that such
Replacement Engine has a value and utility at least equal to, and is in as
good operating condition as, the Engine replaced, assuming such Engine was
in at least the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(iv) furnish the Lessor with such evidence of compliance with
the insurance provisions of Article 13 hereof with respect to such
Replacement Engine as the Lessor or the Indenture Trustee may reasonably
request;
(v) provide the Owner Participant and the Lessor with (A) an
opinion of counsel selected by the Owner Participant and reasonably
acceptable to the Lessee (which opinion shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessor) that it
will suffer no adverse tax consequences not otherwise indemnified for as
of the effective date of this Agreement as a result of such substitution
or (B)an indemnity reasonably acceptable to the Lessor and the Owner
Participant against such consequences, which indemnity shall be bonded or
otherwise secured to the reasonable satisfaction of the Lessor and the
Owner Participant;
(vi) comply with the provisions of Section 9.08 of the
Indenture;
(vii) cause an Indenture and Security Agreement Supplement with
respect to such Replacement Engine to be duly executed by the Lessor and
the Indenture Trustee and recorded pursuant to the Transportation Code, or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may be registered as permitted by Section 6.03(b) of
the Participation Agreement in order that the Indenture shall constitute a
first priority duly perfected Lien and security interest on and in respect
of such Replacement Engine;
(viii) take such other action, including the filing of UCC
financing statements naming the Indenture Trustee as Secured Party with
the Secretary of State of Connecticut and a notice filing with the
Secretary of State of Tennessee, as the Lessor or the Indenture Trustee
may reasonably request in order that such Replacement Engine be duly and
properly titled in the Lessor, leased under this Lease and subjected to
the Lien of the Indenture to the same extent as the replaced Engine;
(ix) furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Lessor, the Indenture Trustee and the Owner Participant to the effect that
(A) the Lessor has good title to such Replacement Engine, and (B) such
Replacement Engine has been validly subjected to the Lien of the Indenture
(with the effect and result that the Indenture constitutes a first
priority duly perfected security interest and Lien on such Replacement
Engine); and
(x) take such other action as the Indenture Trustee may
reasonably request in order that such Replacement Engine be duly and
properly subjected to the Lien of the Indenture to the same extent as the
replaced Engine.
(c) Title Transfer. Upon compliance by the Lessee with the
terms of Sections 11.04(a) and (b) hereof, the Lessor will transfer to the
Lessee (subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a bill of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as appropriate,
in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and Engines or engines then installed on the
Airframe and the Lessee has elected the alternative set forth in Section 11.02
hereof, so much of such payments as shall not exceed the amount required to be
paid by the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor
(or, if the Lien of the Indenture has not been discharged, the Indenture
Trustee) in reduction of the Lessee's obligations under Section 11.02 hereof if
not already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of reimbursement
of the Lessee under this Section 11.05(b). The excess, if any, remaining after
such application shall be divided between the Lessor and the Lessee as their
respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be paid
over to or retained by the Lessee, provided that the Lessee shall have fully
performed its obligations pursuant to Section 11.03 or Section 11.04 hereof, as
the case may be, with respect to the Event of Loss for which such payments are
made.
Section 11.06. Requisition of an Airframe and the Installed
Engines for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee or
any permitted sublessee or transferee from the Requisitioning Government for
such use of the Airframe and Engines or engines during the Term (other than any
such requisition which constitutes an Event of Loss, as to which the provisions
of Section11.05 hereof shall govern) shall, subject to Section11.08 hereof, be
paid over to, or retained by the Lessee or such permitted sublessee or
transferee unless a Payment Default, Bankruptcy Default or Event of Default
shall have occurred and be continuing (in which case such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for Lessee's
obligations hereunder and under the Participation Agreement). All payments
received by the Lessor, the Lessee or any such permitted sublessee or
transferee from the Requisitioning Government for the use of the Airframe and
Engines or engines after the Term shall be paid over to, or retained by, the
Lessor (or the Lessee if it shall have purchased the Lessor's interest therein
in accordance with the provisions hereof). In the event of any such
requisition for use, the Lessee agrees to use reasonable efforts to obtain
reimbursement from the Requisitioning Government to the Lessor for damages
suffered by the Lessor and the Owner Participant as a result of such
requisition for use. The Lessee will endeavor to keep the Lessor informed as
to any negotiations between the Lessee and/or any permitted sublessee or
transferee and a Requisitioning Government with respect to any such requisition
and will consult with the Lessor regarding methods or procedures that are
appropriate to effect recovery from such Requisitioning Government for any
damages suffered by the Lessor and the Owner Participant by reason of such
requisition for use.
Section 11.07. Requisition for Use by Government of an Engine
Not Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed its
obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of
Certain Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07
hereof which is payable to the Lessee shall not be paid to the Lessee, or, if
it has been previously paid directly to the Lessee, shall not be retained by
the Lessee, if at the time of such payment a Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, but shall be
paid to and held by the Lessor (or the Indenture Trustee so long as the Lien of
the Indenture is in effect) as provided in Article 23 hereof as security for
the obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is
purchased by the Lessee as provided in Section 4.02 hereof, at the end of the
Term, or upon the termination of this Lease pursuant to Article 10 or Article
17 hereof or otherwise, the Lessee, at its own cost and expense, will return
the Aircraft by delivering it to the Lessor on the last day of the Term or on
the Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessor
pursuant to the next succeeding sentence (and reasonably acceptable to the
Lessee), within the continental United States (on the Lessee's route structure
as in effect on the return date) and the Airframe shall be fully equipped with
two Engines of the same or an improved make and model as were delivered on the
Delivery Date (or Replacement Engines), free and clear of all Liens (other than
Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessor will give the Lessee at least thirty (30) (or
five (5) in the case of a return pursuant to Article 17 hereof) days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage and provided further that if notice is not delivered the Aircraft shall
be returned in Memphis, Tennessee.
Section 12.02. Return of Engines. If any engine not owned by
the Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to the
Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all the
Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as is,
where is" and (ii) deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing such Engine from the Lien
of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the
Aircraft, the Lessee shall deliver to the Lessor all original (or photocopied
or microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals (including, any service kits previously
furnished by a manufacturer at no cost to the Lessee), certificates and
technical data, and inspection, modification and overhaul records pertaining to
the Airframe, Engines or engines, which are required to be maintained under
applicable rules and regulations of the Aeronautics Authority or pursuant to
the Lessee's or any permitted sublessee's Aeronautics Authority-approved
maintenance program or which the Lessee would otherwise discard upon such
return and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records
maintained with respect to the Aircraft under the maintenance program approved
by the aeronautical authority of any other country of registry of the Aircraft.
All records shall be returned in the format necessary to allow the Lessee or
any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition.
The Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less
than 90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Transportation Code;
(ii) it shall be clean by airline and cargo handling operating
standards;
(iii) the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe
shall have an aggregate of two Engines or engines (as herein authorized
under Section 12.02 hereof), both of the same make and model, installed
thereon, together with the equipment, accessories or parts installed
thereon on the Delivery Date or replacements therefor (as herein
authorized) and alterations, modifications and additions thereto made in
accordance with the provisions of this Lease;
(iv) it shall be in the condition required by Section 12.04(b)
hereof and in as good operating condition as when delivered to the Lessor
on the Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness
certificate issued by the Aeronautics Authority;
(vi) it shall comply with any then applicable rules and
regulations imposed by the Aeronautics Authority and, without limitation
of the foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's FAA-approved maintenance program;
(vii) it shall be free and clear of all Liens and rights of
others (other than Lessor's Liens) including, without limitation, rights
of third parties under pooling, interchange, overhaul, repair and other
similar agreements or arrangements referred to in Section 7.02(a) hereof;
and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft,
the Airframe is not being maintained under a continuous maintenance program,
then the Airframe shall have remaining until the next scheduled "C" check at
least 25% of the allowable hours between "C" checks permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Airframe is subject to a continuous maintenance program, there
will be no time-before-overhaul requirement. If, at the time of return of the
Aircraft, the Engines are not being maintained under an on-condition
maintenance program, then the average number of hours on such Engines remaining
until the next scheduled engine heavy maintenance visit shall be at least 25%
of the allowable hours between engine heavy maintenance visits permitted under
the Lessee's FAA-approved maintenance program. If, at the time of return of
the Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to maintenance
under the Lessee's FAA-approved maintenance program, the Lessee shall have
treated the Aircraft in a nondiscriminatory manner with other Airbus A300-600
series aircraft in the Lessee's fleet, and the Aircraft shall be free and clear
of all Liens and rights of others other than Lessor's Liens and shall be in
compliance in every material respect with the Lessee's maintenance program as
if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a)If the return of
the Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until the
expiration of the six-month period (or, so long as the Lessor shall have
received at least six month's notice of the date on which such shorter period
ends, such shorter period referred to in said clause (iii)(2)(B)) after the
scheduled end of the Term, provided that (i) Stipulated Loss Value and
Termination Value during such extension shall be an amount determined in
accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as
Basic Rent for each day of such delay and this Lease shall continue, an amount
equal to the daily equivalent of the average Basic Rent paid during the Basic
Term and any then expiring Renewal Term, or such higher compensation being paid
by the Government pursuant to the CRAF Program and (iii) neither the Lessee nor
any other Person shall use or operate the Aircraft in any manner, except
pursuant to the activation of such CRAF Program.
(b) In any other situation in which the Aircraft is not returned
to the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii)to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06. Storage. Upon any expiration or termination of
this Lease, at the written request of the Lessor given at least 15 days prior
to such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence of
this Section 12.06), storage at a ramp storage facility for the Aircraft at the
Lessee's principal maintenance facilities in Memphis, Tennessee or one of the
Lessee's other maintenance facilities or at a location selected by the Lessee
used as a location for the parking or storage of aircraft for a period of up to
30 days; provided that if storage is available at no additional cost or expense
to the Lessee at the location at which the Lessor has specified pursuant to
Section 12.01 hereof that return of the Aircraft shall take place, the Lessee
shall provide storage at such location. At the end of such 30 day period, if
the Lessor so requests within 10 days of before the end of such period, the
Lessee will continue to provide such ramp storage facility at such facility or
location for an additional 30 days at the Lessor's expense. If the Lessee is
required to move the Aircraft from one storage facility to another, such move
shall be at the risk and expense of the Lessor. The maintenance and risk of
loss of, and responsibility for obtaining insurance on, the Aircraft shall be
the responsibility of the Lessor during any period of storage; provided,
however, the Lessee will, upon written request of the Lessor and at the
Lessor's expense, not to exceed the Lessee's incremental cost of such service,
obtain insurance for such property (including, if possible, coverage through
its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor,
the Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time
after the Lessee has advised the Lessor that it has determined not to renew
this Lease or purchase the Aircraft, or the Aircraft is otherwise to be
returned to the Lessor, the Lessee shall advise the Lessor of any Part which
the Lessee intends, and is permitted, to remove as provided in Section 9.02(b)
above, and the Lessor may, at its option, upon 30 days' notice to the Lessee,
purchase any or all of such Parts from the Lessee upon the expiration of the
Term at their then Fair Market Value determined in accordance with the
provisions of Section 4.03 hereof. Upon any return of the Aircraft pursuant to
this Article 12, if the Lessor does not elect to exercise its option under this
Section 12.08, the Lessee will, at its own cost and expense, remove such Parts
described in subparagraph (i), (ii) or (iii) of Section 9.02(b) hereof as the
Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property
Damage Liability Insurance. (a) Comprehensive Airline Liability and Property
Damage Liability Insurance. The Lessee, at its own cost and expense, will
maintain or cause to be maintained with respect to the Aircraft, comprehensive
airline liability insurance including, without limitation, passenger legal
liability and property damage liability insurance and cargo legal liability in
such amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks as is
usually carried by similar corporations engaged in the same or similar business
and similarly situated as the Lessee and owning or operating aircraft and
engines similar to the Aircraft and Engines; provided that in no event shall
the limits of liability for all comprehensive airline liability insurance be
less than the amount, per occurrence, as set forth on the insurance certificate
delivered on the Delivery Date unless and only so long as the Aircraft is not
operated and appropriate insurance for the Aircraft on the ground is
maintained. The Lessee will also be required to maintain war risk insurance if
the Aircraft is operated in a war zone if such insurance is available on
commercially reasonable terms and if it is the custom for major international
Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section
13.01(a) hereof, in the event of the requisition for use by the Government of
the Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is substantially
the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and
maintained in accordance with this Section 13.01, and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual
capacity and as owner of the Aircraft, the Indenture Trustee in its
individual capacity and as trustee/mortgagee of the Aircraft, the Pass
Through Trustee, each Liquidity Provider, the Owner Participant and the
Owner Participant Guarantor and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii) provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined
under the policy of insurance required under this Section 13.01 (other
than any action or inaction of such Additional Insured) and shall insure
each Additional Insured regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the
Lessee or any other Additional Insured (other than any breach or violation
of any warranty, declaration or condition by such Additional Insured) as
defined under the policy of insurance required under this Section 13.01;
(iii) provide that if such insurance is cancelled for any reason,
or any substantial change is made in the policies which adversely affect
the scope of the coverage required herein, or if such insurance is allowed
to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to any Additional Insured for thirty (30) days
(except in the case of war risk coverage in which event the applicable
period shall be seven (7) days or such other period as may be customary)
after receipt by each such Additional Insured of written notice from such
insurers or such insurers' broker of such cancellation, change or lapse;
(iv) provide that the insurers shall waive any rights of
subrogation against each Additional Insured, to the extent that the Lessee
has waived its rights under this Lease and the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(v) provide that all of the provisions of such policy shall
operate in the same manner as if there were a separate policy covering
each Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi) be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii) provide that no Additional Insured shall have any
obligation or liability for premiums or other payments, if any, in
connection with such insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering the
Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and conditions
(including coverage for cost of claims), and in amounts as the Lessee
customarily maintains with respect to the aircraft in the Lessee's fleet of the
same type and model and operated on the same routes as the Aircraft (except
that the Lessee shall be required to maintain war-risk, hijacking (air piracy)
and governmental confiscation and expropriation insurance (except in the
country of registry) if the Aircraft is operated on routes where the custom is
for major international Air Carriers flying comparable routes to carry such
insurance), provided that such insurance shall at all times while the Aircraft
is subject to this Lease and the Lien of the Indenture be on an agreed-value
basis for an amount not less than an amount equal to the Stipulated Loss Value
for the relevant period for the Aircraft as set forth on Schedule III to this
Lease.
(b) Policy Terms. Any policies carried and maintained in
accordance with this Section 13.02 and any policies taken out in substitution
or replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual
capacity and as owner of the Aircraft (or, so long as the Indenture shall
not have been discharged, the Indenture Trustee) as an additional insured
and as the sole loss payee (hereinafter in this paragraph (b) sometimes
referred to as "Loss Payee");
(ii) provide with respect to coverage provided under this
Section 13.02, that (i) in the event of a loss involving proceeds in the
aggregate in excess of $6,000,000, the proceeds in respect of such loss up
to an amount equal to the Stipulated Loss Value for the Aircraft shall be
payable to the Lessor (or, so long as the Indenture shall not have been
discharged, the Indenture Trustee), it being understood and agreed that in
the case of any payment to the Lessor (or the Indenture Trustee) otherwise
than in respect of an Event of Loss, the Lessor (or the Indenture Trustee)
shall, unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing, upon receipt of evidence
satisfactory to it that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for
repairs then being made, pay the amount of such payment to the Lessee or
its order, and (ii) the entire amount of any loss involving proceeds in
the aggregate of $6,000,000 or less or the amount of any proceeds of any
loss in excess of the Stipulated Loss Value for the Aircraft shall be paid
to the Lessee or its order unless a Payment Default, a Bankruptcy Default
or an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Lessor or the Indenture Trustee
(and if the insurers have notice of a Payment Default, a Bankruptcy
Default or an Event of Default, such payment shall be made to the
Indenture Trustee);
(iii) provide that if such insurance is cancelled for any reason
or any substantial change is made in the policies which adversely affect
the scope of the coverage required herein, or if such insurance is allowed
to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to the Loss Payee for thirty days (except in the
case of war-risk coverage in which event the applicable period shall be
seven (7) days or such other period as may be customary) after receipt by
the Loss Payee of written notice from such insurer of such cancellation,
change or lapse;
(iv) provide that, in respect of the interest of the Lessor (in
its individual capacity and as the Owner Trustee), the Owner Participant
or the Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this
Section 13.02;
(v) provide that the insurers shall waive any rights of
subrogation against the Lessor (in its individual capacity and as Owner
Trustee), the Owner Participant and the Indenture Trustee to the extent
that the Lessee has waived its rights under this Lease or the
Participation Agreement; provided that the exercise by insurers of rights
of subrogation derived from rights retained by the Lessee shall not, in
any way, delay payment of any claim that would otherwise be payable by
such insurers but for the existence of rights of subrogation derived from
rights retained by the Lessee;
(vi) be primary and without rights of contribution from any
other insurance which is carried by the Loss Payee with respect to its
interest in the Aircraft;
(vii) provide that (except in the case of insurance with respect
to Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may
be) such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise,
in respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect
to Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery
Date.
Section 13.03. Application of Insurance Proceeds. (a)
Generally. All insurance proceeds (other than proceeds from policies carried
by the Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed
on the Airframe and the Lessee has elected or is deemed to have elected
the alternative set forth in Section 11.02 hereof, so much of such
proceeds as shall not exceed the amounts required to be paid by the Lessee
pursuant to said Section 11.02 hereof shall be applied in reduction of the
Lessee's obligation to pay such amounts if not already paid by the Lessee,
or if already paid by the Lessee, shall be applied to reimburse the Lessee
for its payment of such amounts, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be
continuing, and the balance, if any, of such proceeds remaining will be
paid to the order of the Lessee; if and so long as the foregoing proviso
is not satisfied, such proceeds shall be held (unless applied) pursuant to
Section 23.01 hereof as security for the Lessee's obligations hereunder
and under the Participation Agreement; or
(ii) if such proceeds are received with respect to the Airframe
or the Airframe and the Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.03
hereof, or if such proceeds are received with respect to an Engine not
then installed on the Airframe and not replaced by an Engine or engine
under the circumstances contemplated by Section 11.04 hereof, all such
proceeds shall be paid to the Indenture Trustee (unless the Indenture has
been discharged in which case paid to the Lessor) for disbursement to the
order of the Lessee, after the Lessee shall have fully performed the terms
of Section 11.03 or 11.04 hereof, as applicable, with respect to the Event
of Loss for which such proceeds are paid, provided that no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof
as security for the Lessee's obligations hereunder and under the
Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall be
paid to the order of the Lessee, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and so
long as the foregoing proviso is not satisfied, such proceeds shall be held
(unless applied) pursuant to Section 23.01 hereof as security for the Lessee's
obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to
any claim covered by any insurance policy maintained pursuant to this Article
13, the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee shall cause an aviation insurance broker to furnish
to the Lessor and the Indenture Trustee a signed report, stating in reasonable
detail the types of coverage and limits carried and maintained on the Aircraft
and certifying that such insurance complies with the terms and conditions of
this Lease. The Lessee will cause its aviation insurance broker to advise the
Lessor, the Owner Participant and the Indenture Trustee in writing promptly of
any default in the payment of any premium and of any other act or omission on
the part of the Lessee of which it has knowledge and which might invalidate,
cause cancellation of or render unenforceable all or any part of any insurance
carried by the Lessee with respect to the Aircraft. The Lessee will cause such
insurance broker to agree to advise the Lessor, the Indenture Trustee and the
Owner Participant in writing if and when it becomes evident to such broker that
any insurance policy carried and maintained on the Aircraft pursuant to this
Article 13 will not be renewed at the expiration date. If the Lessee shall
fail to maintain insurance as required, the Lessor may, at its option, provide
such insurance, and in such event, the Lessee shall, upon demand, reimburse the
Lessor, as Supplemental Rent, for the cost of such insurance; provided,
however, that no exercise of said option shall affect the provisions of this
Lease, including the provisions that failure by the Lessee to maintain the
prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the
risks required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50% of
the highest insured value of any single aircraft in the Lessee's fleet and (ii)
1.5% of the average aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft not in excess of the amount customarily allowed as a deductible in the
industry shall be permitted in addition to the above-mentioned self-insurance.
The foregoing shall not permit the Lessee to discriminate as between insurance
coverage on the Aircraft and insurance which the Lessee maintains with respect
to similar aircraft owned or operated by the Lessee operating on similar routes
in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and
upon at least five (5) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten (10)
Business Days' prior written notice, all Aeronautics Authority required books
and records of the Lessee and any sublessee relating to the maintenance of the
Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such inspection
of the Aircraft shall be a visual, walk-around inspection of the interior and
exterior of the Aircraft and shall not include opening any panel, bays or the
like without the express consent of the Lessee (except to the extent any such
inspection takes place when any such panel, bays or the like are open).
Notwithstanding the previous sentence, unless a Payment Default, Bankruptcy
Default, material Default relating to maintenance (without giving effect to the
provisos to Section 7.01(b) hereof) or an Event of Default shall have occurred
and be continuing, the Lessor, the Indenture Trustee, the Owner Participant or
their respective authorized representatives shall each be entitled to inspect
the Aircraft only one time during any consecutive twelve-month period. If
following any reregistration of the Aircraft, the Aircraft is located outside
the United States at the time of a proposed inspection, the Lessee shall have
thirty (30) days to relocate the Aircraft within the United States and, if
unable to do so within such time period, shall pay the reasonable incremental
out-of-pocket costs of the Lessor, the Owner Participant or their authorized
representatives incurred in connection with any such inspection outside the
United States. The Lessee shall make any permitted sublease or transfer
permitted under Section 7.02 hereof expressly subject to inspection rights
consistent with this Article 14. The Lessee agrees to respond in a timely
fashion to any of the Owner Trustee's, the Indenture Trustee's or the Owner
Participant's inquiries regarding (x) the location of the Aircraft or any
Engine or (y) the scheduling of any letter check or heavy maintenance visit
with respect to the Aircraft (at which representatives of the Owner
Participant, the Lessor or the Indenture Trustee may be present without regard
to the one-year limitation set forth above).
Section 14.02. No Obligation to Inspect. None of the Lessor,
the Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not,
and shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that it
will not assign or convey its right, title and interest in and to this Lease or
the Aircraft except as contemplated by or provided in this Lease, the Trust
Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee, the
Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a
duly certificated U.S. Air Carrier under the Transportation Code.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events
shall constitute an Event of Default, whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent,
Renewal Rent, Stipulated Loss Value or Termination Value, as the case may
be, or any payment pursuant to Section 17.02 of the Participation
Agreement, within ten Business Days after the date when due (except that
with respect to any failure to pay Excepted Payments, such failure shall
constitute an Event of Default at the discretion of the Owner
Participant); or
(b) the Lessee shall fail to make any payment of Supplemental
Rent (other than amounts described in clause (a) above) within 30 days
after the Lessee has received written notice from the Person entitled to
receive such payment stating that such payment is due (except that with
respect to any failure to pay Excepted Payments for such period, such
failure shall constitute an Event of Default at the discretion of the
Owner Participant); or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that no such lapse or cancellation shall constitute an Event of
Default until the earlier of (A) 20 days (or seven days or such shorter
time as may be standard in the industry with respect to war risk coverage)
after receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft is insured as
required while on the ground and not operated, or (ii) the Aircraft shall
be operated at any time when comprehensive airline liability insurance
required under Section 13.01 hereof shall not be in effect (it being
understood that the Lessee is not required to maintain such insurance
under Section 13.01 hereof while the indemnification or insurance referred
to in the proviso to Section 13.01(b) hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it under
any Operative Agreement (excluding the Tax Indemnity Agreement) or any
other written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the date
a Responsible Officer of the Lessee has actual knowledge of the failure or
the Lessee shall have received written notice from the Lessor or the Owner
Participant of such failure, provided, that in the event such failure is
curable and so long as (but for no longer than 150 days after such 30-day
period) the Lessee shall have promptly undertaken such cure after the
earlier of actual knowledge of a Responsible Officer of the Lessee or
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the
Transportation Code pursuant to the Lessee's covenants and agreement in
Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of
this Lease, when the lapse of such registration is solely because the
Owner Participant or the Lessor has ceased to be a Citizen of the United
States, shall not constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the
Lessee by a court having jurisdiction in the premises in an involuntary
case under the federal bankruptcy laws as now or hereafter in effect; or
the Lessee shall consent to the appointment of a custodian, receiver,
trustee or liquidator of itself or of a substantial part of its property;
or the Lessee is not paying, or shall admit in writing its inability to
pay, its debts generally as they come due or shall make a general
assignment for the benefit of creditors; or the Lessee shall file, or the
Board of Directors of the Lessee shall authorize the filing of, or grant
one or more persons authority (at their discretion) to make a filing for,
a voluntary petition in bankruptcy or a voluntary petition or an answer
seeking reorganization in a proceeding under any bankruptcy laws (as now
or hereafter in effect) or an answer admitting the material allegations of
a petition filed against the Lessee in any such proceeding; or the Lessee
shall file, or the Board of Directors of the Lessee shall authorize the
Lessee to, or grant one or more persons authority (at their discretion)
to, seek relief by voluntary petition, answer or consent, under the
provisions of any other or future bankruptcy or other similar law
providing for the reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with its
creditors; or
(f) an order, judgment or decree shall be entered by any court
of competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall
remain in force undismissed or unvacated for a period of ninety (90) days
after the date of its entry; or
(g) a petition against the Lessee in a proceeding under the
federal bankruptcy law or other insolvency laws (as now or hereafter in
effect) shall be filed and shall not be withdrawn or dismissed within
ninety (90) days, or under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished or unterminated for a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this
Lease or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or
the Participation Agreement (except for the Tax Indemnity Agreement) shall
at any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after a Responsible Officer of the Lessee
shall have actual knowledge or the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at its
option, declare this Lease to be in default (except that no such declaration
shall be required in the case of an Event of Default pursuant to paragraph (e),
(f) or (g) of Section 16.01 hereof and this Lease shall be deemed declared in
default without any further act or notice), and at any time thereafter the
Lessor may do, and the Lessee shall comply with, one or more of the following
with respect to all or any part of the Airframe and the Engines, as the Lessor
in its sole discretion shall elect, to the extent permitted by, and subject to
compliance with, any mandatory requirements of applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such
written demand the Lessee shall, at the Lessee's own cost and expense,
return promptly to the Lessor all or such part of the Airframe and the
Engines as the Lessor may demand in the manner and condition required by,
and otherwise in accordance with all of the provisions of this Lease
(provided that, unless the Lessor shall require otherwise, the Aircraft
shall be returned within the continental United States), or the Lessor, at
its option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without
the necessity for first instituting proceedings, or by summary proceedings
or otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii) With or without taking possession thereof, sell or
otherwise dispose of the Airframe or any Engine, at public or private sale
and with or without advertisement or notice to the Lessee, as the Lessor
may determine, and the Lessor may hold the Lessee liable for any
installment of Basic Rent and Renewal Rent due on or before the date of
such sale (and, if Basic Rent or Renewal Rent is payable in arrears, the
pro rata portion of the installment of Basic Rent or Renewal Rent due on
the next succeeding Rent Payment Date in respect of any period commencing
on the immediately preceding Rent Payment Date to the date of such sale),
or hold, use, operate, lease to others or keep idle all or any part of the
Airframe or any Engine as the Lessor, in its sole discretion, may
determine, in any such case free and clear of any rights of the Lessee
except as otherwise set forth in this Article 17, and without any duty to
account to the Lessee with respect to such action or inaction or for any
proceeds except to the extent required by Section 17.01(a)(iv) hereof; in
the event the Lessor elects to exercise its rights under said Section, and
in connection with any sale of the Aircraft or any part thereof pursuant
to this Article 17, the Lessor, the Indenture Trustee, the Owner
Participant or any Holder may bid for and purchase such property;
(iii) Whether or not the Lessor shall have exercised or shall
later at any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee
specifying a payment date not earlier than 10 days from the date of such
notice, may demand that the Lessee pay to the Lessor, and the Lessee shall
pay to the Lessor on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
the Basic Rent or Renewal Rent due on Rent Payment Dates occurring after
the payment date specified in such notice), any installment of Basic Rent,
Renewal Rent and any Supplemental Rent due on or before such payment date
(and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together
with (A), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on the amount of such
Stipulated Loss Value from such Stipulated Loss Value Determination Date
to the date for payment set forth in such notice from the Lessor and (B)
in all cases, interest, to the extent permitted by applicable law at the
Past Due Rate on the excess of such Stipulated Loss Value over such Fair
Market Value, from the date as of which such Stipulated Loss Value is
payable to the date of actual payment of such amount; provided, however,
that if (and in any event prior to the time for payment hereunder) the
Lessor is unable within a reasonable period of time to recover possession
of the Aircraft, or any portion thereof, pursuant to clause (i) above
unencumbered by this Lease and free and clear of all Liens (other than
Lessor's Liens), the Fair Market Value of the Aircraft or such portion
shall, at the option of the Lessor to the extent legally enforceable, be
zero and, if the Fair Market Value of the Aircraft is deemed to be zero,
after payment in full by the Lessee of the amount specified above and all
other amounts due from the Lessee under this Lease and the other Operative
Agreements, the Lessor shall promptly transfer (without recourse or
warranty other than as to the absence of the Lessor's Liens) all of its
right, title and interest in the Aircraft or such portion, to the Lessee;
(iv) In the event the Lessor, pursuant to Section 17.01(a)(ii)
hereof, shall have sold the Airframe and/or any Engine, the Lessor, in
lieu of exercising its rights under Section 17.01(a)(iii) hereof, may, if
it shall so elect, demand that the Lessee pay the Lessor, and the Lessee
shall pay to the Lessor, on the date of such sale, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due after the date on which such sale occurs) any unpaid
Basic Rent or Renewal Rent due on or before the date on which such sale
occurs (and, if Basic Rent or Renewal Rent is payable in arrears, the pro
rata portion of the installment of Basic Rent or Renewal Rent due on the
next succeeding Rent Payment Date in respect of any period commencing on
the Stipulated Loss Value Determination Date referred to below and ending
on the date of such sale), and any Supplemental Rent due on or before the
date on which such sale occurs, plus an amount equal to the excess, if
any, of (A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date,
over (B) the net proceeds of such sale (after deduction of all of the
Lessor's costs and expenses of such sale, including, without limitation,
sales or transfer taxes, costs of storage, overhaul, maintenance,
preparation and transportation of the Aircraft and brokers' and attorneys'
fees) together with (x), if Basic Rent is payable in advance, interest, to
the extent permitted by applicable law, at the Debt Rate on such
Stipulated Loss Value from such Stipulated Loss Value Determination Date
to the date of such sale and (y) in all cases, interest to the extent
permitted by applicable law at the Past Due Rate, on the amount of such
excess from the date of such sale to the date of actual payment by the
Lessee;
(v) Proceed by appropriate court action to enforce the terms of
this Lease or to recover damages for its breach;
(vi) Terminate or rescind this Lease as to the Airframe or any
or all of the Engines; or
(vii) Exercise any other right or remedy which may be available
to the Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall
be liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or after
any termination hereof, and for all reasonable legal fees and other costs and
expenses incurred by the Lessor, the Indenture Trustee or the Owner Participant
by reason of the occurrence of any Event of Default or the exercise of the
Lessor's remedies, including, without limitation, all costs and expenses
incurred in connection with the return of the Airframe or any Engine in
accordance with the terms of Article 12 hereof or in placing the Airframe or
Engines in the condition and state of airworthiness required by such Article or
in connection with any inspection, use, operation, maintenance, insurance,
storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise
provided, no remedy referred to in this Article 17 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to the Lessor at law or in equity; and the
exercise or beginning of exercise by the Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by the Lessor of
any or all of such other remedies.
Section 17.03. Waiver. No express or implied waiver by the
Lessor of any Event of Default shall in any way be, or be construed to be, a
waiver of any future or subsequent Event of Default. To the extent permitted
by applicable law, the Lessee waives any rights now or in the future conferred
by statute or otherwise which may require the Lessor to sell, lease or
otherwise use the Airframe or any Engine in mitigation of the Lessor's damages
or which may otherwise limit or modify any of the Lessor's rights or remedies
under this Article 17. The Lessor's access to the Aircraft is of the essence
and shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the
Lessee fails to make any required payment of Rent or fails to perform or comply
with any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee, shall
be deemed Supplemental Rent payable by the Lessee upon demand. No such payment
or performance by the Lessor shall be deemed to waive any Default or Event of
Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it nor
any other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and it
being understood that the Lessor shall not be liable for any act or omission of
the Indenture Trustee or any other Person claiming through the Indenture
Trustee) shall interfere with the Lessee's right to quietly enjoy the Aircraft
without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution
and delivery of the Lease Supplement and the Indenture and Security Agreement
Supplement, the Lessee will cause each of them and this Lease, the Trust
Agreement and the Indenture, to be duly filed for recordation in accordance
with the Transportation Code and will maintain the recordation of the Indenture
until the Lien of the Indenture shall have been discharged pursuant to the
terms of the Indenture. In addition, the Lessee will, at the Lessee's own cost
and expense, promptly and duly execute and deliver to the Lessor, the Owner
Participant and the Indenture Trustee such further documents and assurances to
carry out the intent and purpose of this Lease and the Indenture and to
establish and protect the rights and remedies created or intended to be created
in favor of the Lessor under this Lease, and of the Owner Participant under the
Trust Agreement, and of the Indenture Trustee under the Indenture, including,
without limitation, the execution and filing of UCC financing and continuation
statements, the execution and delivery of supplements and amendments to this
Lease and the Indenture, in recordable form, subjecting to this Lease and the
Indenture any Replacement Airframe and/or Replacement Engines delivered by the
Lessee pursuant to Section 11.03 hereof and any Replacement Engine delivered by
the Lessee pursuant to Section 11.04 hereof and the recording and filing of
counterparts of this Lease and the Indenture in accordance with the laws of
such jurisdictions as the Lessor or the Indenture Trustee may from time to time
deem advisable. The foregoing does not impose upon the Lessor any additional
liabilities not otherwise contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease,
it being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off, counterclaim, recoupment, defense or other
right which the Lessee may have against the Lessor, the Owner Participant,
any Holder, the Indenture Trustee or anyone else for any reason
(including, without limitation, any breach by the Lessor or the Owner
Participant or the Indenture Trustee or any Holder of their respective
representations, warranties, agreements or covenants contained in any of
the Operative Agreements);
(ii) any defect in the title, airworthiness, registration,
eligibility for registration under the Transportation Code (and the
regulations thereunder) or under any of the laws or regulations of any
other country of registry of the Aircraft, condition, design, operation,
merchantability or fitness for use of, suitability for a particular
purpose of, or any damage to or loss or destruction of, the Aircraft or
any portion thereof, or any interruption or cessation in the use or
possession of the Aircraft by the Lessee or any sublessee for any reason
including, without limitation, by reason of governmental action or any
doctrine of force majeure or impossibility of performance;
(iii) any insolvency, bankruptcy, reorganization or similar case
or proceedings by or against the Lessor, the Lessee, the Indenture Trustee
or the Owner Participant or any other Person;
(iv) any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto,
or any lack of right, power or authority of the Lessor or the Lessee or
any sublessee or any other party to any other Operative Agreement to enter
into this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever,
whether or not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives
any and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to terminate, cancel, quit, rescind
or surrender this Lease, the Airframe, or any Engine or part thereof, other
than in accordance with the terms hereof.
(c) Except as expressly provided herein, each payment of Rent
made by the Lessee shall be final as to the Lessor and the Lessee, and the
Lessee will not seek to return nor to recover, abate, suspend, defer or reduce
all or any part of any such payment of Rent from the Lessor or from the
Indenture Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the
case of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without the
necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy of
the Indenture.
Section 22.02. [Reserved].
Section 22.03. Consent of Lessee to Assignment of Lease as
Security. The Lessee hereby accepts and consents, pursuant to the terms of the
Indenture, the Indenture Trustee's rights to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, the right
to transfer or assign title to the Aircraft subject to this Lease, to make all
waivers and agreements except as otherwise provided in the Indenture, to give
all notices, consents and releases and to take all action upon the happening of
a Default or Event of Default under this Lease (except as otherwise
specifically provided in the Indenture), or to do any and all other things
whatsoever which the Lessor is or may become entitled to do under this Lease
(except as otherwise provided in the Indenture); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time as,
it is unable to do so by virtue of the Indenture, shall remain liable for the
performance of all the terms, conditions, covenants and provisions for which it
is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee shall be held by the Lessor as security for,
and may be applied by the Lessor against, the obligations of the Lessee under
this Lease during such time as there shall have occurred and be continuing a
Payment Default, Bankruptcy Default or Event of Default, and, at such times as
there shall not be continuing a Payment Default, Bankruptcy Default or Event of
Default, such amounts, net of any amounts which have been applied by the Lessor
against the Lessee's obligations hereunder, shall be paid to the Lessee as
provided in this Lease. Any amounts which are held by the Lessor pending
payment to the Lessee shall, until paid to the Lessee or applied against the
Lessee's obligations hereunder, be invested by the Lessor, as directed from
time to time, in writing (and in the absence of a written direction by the
Lessee, the Lessor shall invest such monies in direct obligations of the United
States of America), by the Lessee and at the expense and risk of the Lessee, in
the following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii) obligations fully guaranteed by the United States of
America; or
(iii) certificates of deposit issued by, or bankers' acceptances
of, or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include
the Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and
surplus of at least $500,000,000 and having a rating of "A" or better from
Moody's or S&P; or
(iv) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively (or if neither such organization shall rate such commercial
paper at any time, a rating by any nationally recognized statistical
rating organization in the United States of America equal to the highest
rating assigned by such rating organization) (which may include commercial
paper issued by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or any Affiliate thereof).
(b) At any time any invested funds are distributed to the
Lessee, there shall be promptly remitted to the Lessee any gain (including
interest received) realized as the result of any investment pursuant to
Section23.01(a) hereof (net of any fees, commissions and other costs and
expenses, if any, incurred by the Lessor in connection with such investment),
unless a Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing in which case such funds shall be applied in the
same manner as the principal so invested. The Lessee shall be responsible for
and will promptly pay to the Indenture Trustee or the Lessor, as the case may
be, on demand, the amount of any loss realized as the result of any such
investment (together with any fees, commissions and other costs and expenses,
if any, incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Indenture or the Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed by
SSB not individually but solely as Owner Trustee under the Trust Agreement in
the exercise of the power and authority conferred and vested in it as such
Owner Trustee, that each and all of the representations, undertakings and
agreements by the Lessor herein are for the purpose and with the intention of
binding only the Lessor's Estate, and that in no case whatsoever shall SSB be
personally liable for any loss in respect of such representations, undertakings
and agreements, that actions to be taken by the Lessor pursuant to its
obligations hereunder may, in certain instances, be taken by the Lessor only
upon specific authority of the Owner Participant that nothing herein contained
shall be construed as creating any liability on SSB, individually or
personally, to perform any covenant, either express or implied, herein, all
such liability, if any, being expressly waived by the Lessee and by each and
every Person now or hereafter claiming by, through or under the Lessee except
with respect to the gross negligence or willful misconduct of SSB, and that so
far as SSB, individually or personally is concerned, the Lessee and any Person
claiming by, through or under the Lessee shall look solely to the Lessor's
Estate for the performance by the Lessor of any of its obligations under this
Lease; provided, that nothing in this Section 24.01 shall be construed to limit
in scope or substance those representations and warranties of SSB in its
individual capacity set forth in the Participation Agreement or the Trust
Agreement. The term "Lessor" as used in this Lease shall include any trustee
succeeding SSB as Owner Trustee under the Trust Agreement. Any obligation of
the Lessor hereunder may be performed by the Owner Participant, and any such
performance shall not be construed as revocation of the trust created by the
Trust Agreement. Nothing contained in this Lease shall restrict the operation
of the provisions of the Trust Agreement with respect to its revocation of the
resignation or removal of the Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and
other communications required by this Lease shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid, five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2005 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General
Counsel; telephone (901) 395-3388, facsimile (901) 395-4758; or at such
other address as the Lessee shall from time to time designate in writing
to the Lessor, the Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
State Street Bank and Trust Company, Two International Place, 4th Floor,
Boston, Massachusetts 02110, Attention: Corporate Trust Department,
telephone (617) 664-5526, facsimile (617) 664-5371; or to such other
address as the Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to Owner Participant at the
Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the
Participation Agreement;
(d) If to the Indenture Trustee, to its office at 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department, telephone (801) 246-5630, facsimile (801) 246-5053; or to such
other address as the Indenture Trustee shall from time to time designate
in writing to the Lessor, the Lessee and the Owner Participant; and
(e) If to Moody's, to its office at Moody's Investors Service,
99 Church Street, New York, New York 10007, Attention: Corporate
Department-Industrials, telephone (212) 553-0300, facsimile (212)
553-4661; or to such other address as Moody's shall from time to time
designate in writing to the Lessee.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and
section headings and captions used in this Lease are purely for convenience and
shall not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article
or section number shall be interpreted as a reference to that article or
section of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions
of this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that
this Lease constitutes chattel paper (as such term is defined in the UCC as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original chattel-paper counterpart, which shall be the counterpart containing
the receipt executed by the Indenture Trustee on its signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the UCC), but all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Lease by
signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event
of Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall be
and should be construed so as to be, entitled to the full benefits of Section
1110 of the Bankruptcy Code and any successor provision thereof.
Section 27.03. Finance Lease. This Lease is a "finance lease"
within the meaning of Section 2-A103(g) of the UCC.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused
this Lease to be duly executed as of the date first above written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name: Paul D. Allen
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ______________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of August, 1998.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _______________________________________
Name: Greg A. Hawley
Title: Vice President
SCHEDULE I
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at 225 Asylum Street,
Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE II
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
-------- ------- -------
[On each Payment Date, Lessee will pay as Basic Rent an amount that will
be at least sufficient to pay in full, as of such Payment Date, the
aggregate unpaid principal amount of due and unpaid installments on the
Certificates outstanding on such Payment Date, together with the accrued
and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
---- ----------------
[Stipulated Loss Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid principal
amount of the Certificates outstanding on such date of payment, together
with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
----------- ------------
[Termination Value will be an amount at least sufficient to pay in full,
as of the date of payment thereof, the aggregate unpaid principal amount
of the Certificates outstanding on such date of payment, together with the
accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02(a)(D) of the
Lease. In the event of any Significant Expenditure (as defined below)
with respect to the Aircraft, which the Lessee has certified in a
certificate of the Lessee's President, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer furnished to the Lessor, the Indenture Trustee and the Owner
Participant, is (as determined by the Lessee in its sole discretion)
necessary, desirable or required to be made at any time on or after the
eighth anniversary of the Delivery Date, the Lessee may elect to terminate
the Lease and purchase the Aircraft on the first Rent Payment Date
occurring at least six months after the Owner Participant has notified the
Lessee that they will not permit such Significant Expenditure to be
financed as contemplated in clause (ii) of the definition of "Significant
Expenditure" below, for, at the Lessee's option, either (1) the payment to
the Lessor in immediately available funds of an amount equal to the
greater of the Fair Market Value of the Aircraft and the Termination Value
for the Aircraft, determined in each case as of such Rent Payment Date, or
(2) the assumption by the Lessee, pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture, of all of the
Lessor's obligations under the Indenture, the Certificates and Section
7.04 of the Participation Agreement, and the payment to the Lessor in
immediately available funds of an amount equal to the excess of (A) the
greater of (I) the Termination Value for the Aircraft, and (II) the Fair
Market Value of the Aircraft, both computed as of such Rent Payment Date,
over (B) the unpaid principal amount of the Certificates outstanding plus
accrued interest as of such date; it being understood that the Fair Market
Value for this purpose shall be determined without regard to any
Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant
Expenditure" means a single expenditure or a series of related
expenditures in respect of non-severable improvements (i.e. improvements
which cannot by the terms of Section 9.02(b) of the Lease be removed from
the Aircraft) which (i) in the Lessee's reasonable judgment would exceed
$10,000,000, and (ii) the Owner Participant will not permit to be financed
on similar terms and conditions then available for similar transactions
through the issuance of additional non-recourse notes of the Lessor or
through additional equity investments of the Owner Participant or both (it
being understood that Section 4.02(a)(D) of the Lease shall not impose any
obligation on the Owner Participant to provide such financing). The
Lessee, prior to notifying the Owner Participant and the Indenture Trustee
in accordance with Paragraph (F) of this Schedule V of its election to
purchase the Aircraft pursuant to Section 4.02(a)(D) of the Lease, shall
notify the Owner Participant of the non-severable improvements which would
satisfy the conditions described in clause (i) of the preceding sentence,
and provide the Owner Participant with a reasonable opportunity to permit
the financing thereof as contemplated in clause (ii) of such sentence.
The Owner Participant shall notify the Lessee of their decision with
respect to such financing within 60 days after the Lessee has given the
notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02 (a)(E) of the
Lease. In the event that a Burdensome Indemnity Payment (as defined
below) shall occur at any time on or after the eighth anniversary of the
Delivery Date, the Lessee may elect to terminate the Lease and purchase
the Aircraft on the first Rent Payment Date (the "Burdensome Indemnity
Payment Date") following the date that the Owner Participant provide the
Lessee with a written notice of any Loss (as defined in Section 5 of the
Tax Indemnity Agreement) that is a Burdensome Indemnity Payment for, at
the Lessee's option, either (1) the payment to the Lessor in immediately
available funds of an amount equal to the greater of the Fair Market Value
of the Aircraft and Termination Value for the Aircraft, determined in each
case as of such Burdensome Indemnity Payment Date, or (2) the assumption
by the Lessee, pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture, of all of the obligations of the Lessor
under the Indenture, the Certificates and Section 7.04 of the
Participation Agreement and the payment to the Lessor in immediately
available funds, of an amount equal to the excess of (A) the greater of
(I) the Termination Value for the Aircraft and (II) the Fair Market Value
of the Aircraft, both computed as of the Burdensome Indemnity Payment
Date, over (B) the unpaid principal of the Certificates outstanding plus
accrued interest as of such date.
For purposes of this paragraph (E), the term "Burdensome
Indemnity Payment" means a Loss as defined in the Tax Indemnity Agreement
resulting from any act, event or circumstance which is outside the control
of the Lessee or any Affiliate of the Lessee which causes the aggregate
net present value as of the determination date, discounted semi-annually
at the Debt Rate, of all such Losses (but excluding any Losses for which
the Owner Participant shall have waived its right to payment under the Tax
Indemnity Agreement) paid or payable by the Lessee which can be avoided
through a purchase by the Lessee of the Aircraft, to exceed 3.0% of the
Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor,
the Owner Participant and the Indenture Trustee not more than 360 days nor
less than 90 days prior written notice of its election to purchase
pursuant to Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice
shall either direct the Lessor to prepay the Certificates in full on such
Termination Date pursuant to Section 6.02 of the Indenture or state that
the Lessee shall exercise its option to assume the Certificates pursuant
to Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture. The Lessee's notice pursuant to Section 4.02(a)(D) or
4.02(a)(E) of the Lease shall become irrevocable 10 days prior to the
applicable purchase date designated in such notice but if any such notice
is revoked, the Lessee shall no longer be entitled to purchase the
Aircraft as a result of the facts and circumstances originally giving rise
to such right.
Exhibit A
to
Lease Agreement
---------------
THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT
NO. __ IS SUBJECT TO A SECURITY INTEREST
LEASE SUPPLEMENT NO. __
(Federal Express Corporation Trust No. N677FE)
LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No.
N677FE), dated ________ __, ____, between STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity, but solely as Owner Trustee under the Trust Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Lessor"), and FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have entered into that certain
Lease Agreement (Federal Express Corporation Trust No. N677FE) dated as of June
15, 1998, as amended and restated as of August 1, 1998 (the "Lease", the
defined terms in the Lease being used in this Lease Supplement with the same
meaning as in the Lease), which provides for the execution and delivery of a
Lease Supplement, substantially in the form of this Lease Supplement No. __,
for the purpose of leasing under the Lease the aircraft and engines described
below ("Aircraft") as and when delivered by the Lessor to the Lessee in
accordance with the terms of the Lease;
WHEREAS, the Lease relates to the Aircraft;
WHEREAS, a counterpart of the Lease is attached to and made a
part of this Lease Supplement, and this Lease Supplement, together with such
attachment, is being filed for recordation on this date with the FAA as one
document.
NOW, THEREFORE, for and in consideration of the premises and
other good and sufficient consideration, the Lessor and the Lessee agree as
follows:
Section 1. Delivered Aircraft. The Lessor hereby delivers and
leases to the Lessee under the Lease, and the Lessee hereby accepts and leases
from the Lessor under the Lease, the following described Airbus A300F4-605R
Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date of
this Lease Supplement consists of the following:
(a) Airbus A300F4-605R Airframe; U.S. Registration Number
______; Manufacturer's Serial No. ___; and
(b) Two (2) General Electric CF6-80C2-A5F Engines bearing,
respectively, Manufacturer's Serial Nos. ___-___ and ___-___ (each of
which engines has 750 or more rated takeoff horsepower or the equivalent
of such horsepower).
Section 2. Delivery Date. The Delivery Date of the Delivered
Aircraft is the date of this Lease Supplement.
Section 3. Purchase Price. The Purchase Price of the Delivered
Aircraft shall be the amount set forth in Ancillary Agreement I.
Section 4. Term. The Term for the Delivered Aircraft shall
commence on the Delivery Date, and shall terminate on ______, ____, unless
earlier terminated or extended pursuant to the terms of the Lease.
Section 5. Rent. The Lessee hereby agrees to pay the Lessor
Rent for the Delivered Aircraft throughout the Term thereof in accordance with
the terms and provisions of the Lease.
Section 6. Lessee's Acceptance of Delivered Aircraft. The
Lessee hereby confirms to the Lessor that the Delivered Aircraft has been duly
marked in accordance with Section 7.03 of the Lease and that the Lessee has
accepted the Delivered Aircraft for all purposes hereof and of the Lease, and
as being free and clear of all Liens except Lessor's Liens. Such acceptance by
the Lessee shall be without prejudice to any rights of the Lessor or the Lessee
against AVSA, the Manufacturer, the Engine Manufacturer or any vendor of
equipment included in the Aircraft.
Section 7. Incorporation of Lease By Reference. All the
provisions of the Lease are hereby incorporated by reference in this Lease
Supplement to the same extent as if fully set forth in this Lease Supplement.
Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE
BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN THE STATE OF NEW YORK.
Section 9. Agreement as Chattel Paper. To the extent that this
Lease Supplement constitutes chattel paper (as such term is defined in the UCC
as in effect in any applicable jurisdiction), no security interest in this
Lease Supplement may be created through the transfer or possession of any
counterpart other than the original chattel-paper counterpart, which shall be
the counterpart containing the receipt executed by the Indenture Trustee on its
signature page.
Section 10. Counterparts. This Lease Supplement may be executed
in any number of counterparts, each of which shall be an original (except that
only the counterpart bearing the receipt executed by Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the UCC), but all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Lease
Supplement by signing any such counterpart.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease Supplement to be duly executed as of the day and year first above
written.
LESSOR: STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ________________________________________
Name: Paul D. Allen
Title: Vice President
LESSEE: FEDERAL EXPRESS CORPORATION
By: ________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
Receipt of this original counterpart of the Lease Supplement is
hereby acknowledged on this ___ day of ______ 1998.
Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: ___________________________________________
Name: Greg A. Hawley
Title: Vice President
Exhibit B
to
Lease Agreement
[See Exhibit E to the Participation Agreement]
Exhibit C
to
Lease Agreement
[See Exhibit F to the Participation Agreement]
